Exhibit 99.2











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| | 





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|----------------------------
|PEMBINA PIPELINE CORPORATION
|                            
|2013                        
|                            







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 26, 2014 and is supplementary to, and should be
read in conjunction with, Pembina's audited consolidated annual financial statements for the years ended December 31, 2013 and
2012 ("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."

On
April 2, 2012, Pembina completed its acquisition of Provident Energy Ltd. ("Provident") (the "Acquisition").
The amounts disclosed herein for the comparative twelve month period ended December 31, 2012 reflect results of the post-Acquisition
Pembina from April 2, 2012 together with results of legacy Pembina alone, excluding Provident, from January 1 through April 1,
2012. The results of the business acquired through the Acquisition are reported as part of the Company's Midstream business. For
further information about the Acquisition, please refer to Note 27 of the Consolidated Financial Statements.

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 60 years. Pembina owns
and operates an integrated system of pipelines that transport various hydrocarbon liquids including conventional and synthetic
crude oil, heavy oil and oil sands products, condensate (diluent) and natural gas liquids produced in western Canada. The Company
also owns and operates gas gathering and processing facilities and an oil and natural gas liquids infrastructure and logistics
business. With facilities strategically located in western Canada and in natural gas liquids markets in eastern Canada and the
U.S., Pembina also offers a full spectrum of midstream and marketing services that spans across its operations. Pembina's integrated
assets and commercial operations enable it to offer services needed by the energy sector along the hydrocarbon value chain.

Pembina is a trusted member of the communities in which
it operates and is committed to generating value for its investors by running its businesses in a safe, environmentally responsible
manner that is respectful of community stakeholders.

Strategy

Pembina's goal is to provide highly competitive and reliable
returns to investors through monthly dividends on its 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 Pembina's asset base along the hydrocarbon value chain by providing integrated service offerings which enhance profitability;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------













|Pembina Pipeline Corporation | 
|---------------------------- | 



| | • | 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.

Common
Abbreviations

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

|Measurement
        bpd	barrels per day
        mbpd	thousands of barrels per day
        mmbbls	millions of barrels
        mboe/d	thousands of barrels
        of oil equivalent per day
        MMcf/d	millions of cubic feet
        per day
        bcf/d	billions of cubic feet
        per day
        MW/h	megawatts per hour
        GJ	gigajoule
        km	kilometre | Other
        AECO	Alberta gas trading price
        AESO	Alberta Electric Systems
        Operator
        B.C.	British Columbia
        DRIP	Premium DividendTM
        and Dividend Reinvestment Plan
        Frac	Fractionation
        IFRS	International Financial
        Reporting Standards
        NGL	Natural gas liquids
        NYSE	New York Stock Exchange
        TSX	Toronto Stock Exchange
        U.S.	United States
        WCSB	Western Canadian Sedimentary
        Basin
        WTI	West Texas Intermediate
        (crude oil benchmark price)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



2









|Pembina Pipeline Corporation | 
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Financial
& Operating Overview

|                                                                             |  | 3
    Months Ended 	December 31(unaudited) |       | 12 Months Ended 	December 31
|---------------------------------------------------------------------------- |  | ------------------------------------------ | ----- | ----------------------------
|($ millions, except where noted)                                             |  | 2013                                       |       | 2012                        
|Conventional Pipelines throughput (mbpd)                                     |  |                                            | 500   |                             
|Oil Sands & Heavy Oil contracted capacity, end of period (mbpd)              |  |                                            | 880   |                             
|Gas
    Services average volume processed (mboe/d)net to Pembina(1)          |  |                                            | 66    |                             
|NGL sales volume (mbpd)                                                      |  |                                            | 122   |                             
|Total volume (mbpd)                                                          |  |                                            | 1,568 |                             
|Revenue                                                                      |  |                                            | 1,301 |                             
|Cost of goods sold, including product purchases                              |  |                                            | 922   |                             
|Net revenue(2)                                                               |  |                                            | 379   |                             
|Operating expenses                                                           |  |                                            | 101   |                             
|Realized (loss) gain on commodity-related derivative financial instruments   |  |                                            | (3    | )                           
|Operating margin(2)                                                          |  |                                            | 275   |                             
|Depreciation and amortization included in operations                         |  |                                            | 42    |                             
|Unrealized gain (loss) on commodity-related derivative financial instruments |  |                                            | 2     |                             
|Gross profit                                                                 |  |                                            | 235   |                             
|Deduct                                                                       |  |                                            |       |                             
|General and administrative expenses                                          |  |                                            | 43    |                             
|Acquisition-related and other expenses                                       |  |                                            | 1     |                             
|Net finance costs                                                            |  |                                            | 55    |                             
|Current tax expense                                                          |  |                                            | 19    |                             
|Deferred tax expense                                                         |  |                                            | 22    |                             
|Earnings                                                                     |  |                                            | 95    |                             
|Earnings per common share - basic and diluted (dollars)                      |  |                                            | 0.29  |                             
|Adjusted EBITDA(2)                                                           |  |                                            | 235   |                             
|Cash flow from operating activities                                          |  |                                            | 194   |                             
|Cash flow from operating activities per common share (dollars)               |  |                                            | 0.62  |                             
|Adjusted cash flow from operating activities(2)                              |  |                                            | 180   |                             
|Adjusted cash flow from operating activities per common share (dollars)(2)   |  |                                            | 0.57  |                             
|Common share dividends declared                                              |  |                                            | 132   |                             
|Dividends per common share (dollars)                                         |  |                                            | 0.42  |                             
|Preferred share dividends declared                                           |  |                                            | 5     |                             
|Capital expenditures                                                         |  |                                            | 275   |                             
|Total enterprise value ($ billions)(2)                                       |  |                                            | 15    |                             
|Total assets ($ billions)                                                    |  |                                            | 9     |                             

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

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

Net revenue increased 28 percent to $379 million during
the fourth quarter of 2013 from $297 million during the same period of 2012. This increase was due to strong performance in each
of Pembina's businesses, particularly in Midstream and Gas Services, as well as returns on new capital investments. Full-year net
revenue in 2013 was $1,306 million compared to $952 million in 2012, up 37 percent from the same period last year. This increase
was primarily due to improved performance in each of Pembina's businesses, including returns on new capital investments, as well
as the impact of the Acquisition.

Operating expenses were $101 million during the fourth quarter
and $356 million for the full-year in 2013 compared to $86 million and $271 million during the same periods in 2012. The increase
in operating expenses for the fourth quarter and full-year of 2013 was largely the result of higher variable costs, such as power,
labour and pipeline and facility integrity expenses, due to increased volumes that were driven by higher oil and NGL industry activity,
as well as additional costs associated with the growth in Pembina's asset base primarily related to the Acquisition and Pembina's
completed growth projects.

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|Pembina Pipeline Corporation | 
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Operating margin was $275 million during the fourth quarter
of 2013, up 24 percent from the same period last year when operating margin totalled $222 million. These increases were primarily
the result of a strong NGL market in Midstream and the Saturn I Facility being placed into service in Gas Services. For the year
ended December 31, 2013, operating margin was $949 million compared to $676 million for the full year of 2012. These
increases were primarily due to strong performance and growth across Pembina's operations, particularly from Midstream and Gas
Services. The full-year increase was also attributable to the timing and impact of the Acquisition.

Gains/losses on commodity-related derivative financial instruments
resulting from Pembina's market risk management program are primarily related to power, frac spread, and product margin derivative
financial instruments (see "Market Risk Management Program" and Note 22 to the Consolidated Financial Statements).Pembina realized losses of $3 million and $1 million and recognized unrealized gains of $2 million and $7 million on commodity-related
derivative financial instruments for the fourth quarter and year ended December 31, 2013, respectively, reflecting changes
in the future NGL, natural gas and power price indices. For the comparative periods in 2012, the Company realized gains of $11
million and losses of $5 million and recognized unrealized losses of $2 million and gains of $36 million on commodity-related derivative
financial instruments which were largely attributable to the reduction in the future NGL price indices between April 2, 2012, the
date of the Acquisition, and December 31, 2012.

Depreciation and amortization included in operations decreased
to $42 million during the fourth quarter of 2013 compared to $48 million during the same period in 2012 and to $163 million for
the year ended December 31, 2013 compared to $174 million in 2012. Both the quarterly and full-year decreases reflect a re-measurement
of the decommissioning provision in excess of the carrying amount of the related asset which was recognized as a credit to depreciation
expense in Conventional Pipelines.

Increases in revenue and operating margin and a
decrease in depreciation and amortization included in operations contributed to gross profit of $235 million during the
fourth quarter and $793 million for the full year of 2013 compared to $172 million and $538 million for the same periods of
2012.

General and administrative expenses ("G&A")
of $43 million were incurred during the fourth quarter of 2013, up from $27 million during the fourth quarter of 2012. This increase
was primarily due to the addition of new employees as a result of Pembina's growth since the prior period as well as increased
short-term and share-based incentive expenses as a result of a 10 percent increase in the Company's share price ($3.28 per share)
during the fourth quarter. Full-year 2013 G&A totaled $132 million compared to $97 million in 2012. The increase for the full-year
was mainly due to higher salary and incentive expenses as a result of additional employees (approximately 20 percent) due to the
Company's growth and the Acquisition and a 31 percent increase in Pembina's share price ($8.96 per share) at December 31, 2013
compared to December 31, 2012. Every $1 change in share price is expected to change Pembina's annual share-based incentive expense
by approximately $1 million.

Pembina generated adjusted EBITDA of $235 million during
the fourth quarter of 2013 compared to $199 million during the fourth quarter of 2012. This increase was largely due to improved
results from operating activities in each of Pembina's businesses and returns on new assets, expansions and services. Adjusted
EBITDA for the full-year of 2013 was $831 million compared to $590 million in 2012 with the increase caused by strong results in
each of Pembina's businesses including new assets, expansions and services having been brought on-stream, an improved propane market
and the timing of the Acquisition.

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|Pembina Pipeline Corporation | 
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The
Company's earnings increased to $95 million ($0.29 per common share) during the fourth quarter of 2013 compared to $81 million
($0.28 per common share) during the fourth quarter of 2012 and $351 million ($1.12 per common share) for the full-year of 2013
compared to $225 million ($0.87 per common share) in 2012. These increases were primarily due to improved operating margin which
was offset by a $68 million increase in income tax expense and a $71 million unrealized loss relating to the conversion feature
of Pembina's outstanding convertible debentures (2012: nil) due to the increase in Pembina's common share price in 2013. The year-to-date
results were also impacted by the timing of the Acquisition.

Cash
flow from operating activities was $194 million ($0.62 per common share) during the fourth quarter of 2013 compared to $139 million
($0.48 per common share) for the same period in 2012. For the year ended December 31, 2013, cash flow from operating activities
was $651 million ($2.12 per common share) compared to $360 million ($1.39 per common share) during 2012. The quarterly and full-year
increases were primarily due to improved results from operating activities and decreased changes in non-cash working capital.
The timing of the Acquisition also impacted the full-year variances.

Adjusted cash flow from operating activities was $180
million ($0.57 per common share) during the fourth quarter of 2013 compared to $172 million ($0.59 per common share) during
the fourth quarter of 2012. This decrease on a per share basis was due to higher interest paid and current taxes, preferred
share dividends as well as an increase in the number of common shares outstanding. Adjusted cash flow from operating
activities was $720 million ($2.34 per common share) during 2013 compared to $494 million ($1.91 per common share) during
2012, with the increase primarily due to stronger operating results, returns on new investments and expansions as well as the
impact of the Acquisition.

Operating Results

|                       |  | 3
    Months Ended 	December 31 	(unaudited) |     | 12 Months Ended 	December 31
|---------------------- |  | -------------------------------------------- | --- | ----------------------------
|                       |  | 2013                                         |     | 2012                        
|($ millions)           |  | Net Revenue(1)                               |     | Operating Margin(1)         
|Conventional Pipelines |  |                                              | 111 |                             
|Oil Sands & Heavy Oil  |  |                                              | 52  |                             
|Gas Services           |  |                                              | 33  |                             
|Midstream              |  |                                              | 184 |                             
|Corporate              |  |                                              | (1  | )                           
|Total                  |  |                                              | 379 |                             

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



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|Pembina Pipeline Corporation | 
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Conventional Pipelines

|                                                                             |  | 3 Months Ended 	December 31 	(unaudited) |     | 12 Months Ended 	December 31
|---------------------------------------------------------------------------- |  | ---------------------------------------- | --- | ----------------------------
|($ millions, except where noted)                                             |  | 2013                                     |     | 2012                        
|Average throughput (mbpd)                                                    |  |                                          | 500 |                             
|Revenue                                                                      |  |                                          | 111 |                             
|Operating expenses                                                           |  |                                          | 52  |                             
|Realized gain on commodity-related derivative financial instruments          |  |                                          |     |                             
|Operating margin(1)                                                          |  |                                          | 59  |                             
|Depreciation and amortization included in operations                         |  |                                          | 6   |                             
|Unrealized (loss) gain on commodity-related derivative financial instruments |  |                                          | (1  | )                           
|Gross profit                                                                 |  |                                          | 52  |                             
|Capital expenditures                                                         |  |                                          | 126 |                             

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

Business Overview

Pembina's Conventional Pipelines business comprises a well-maintained
and strategically located 8,200 km pipeline network that extends across much of Alberta and B.C. It transports approximately half
of Alberta's conventional crude oil production, about thirty percent of the NGL produced in western Canada, and virtually all of
the conventional oil and condensate produced in B.C. This business' primary objectives are to provide safe and reliable 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

During the fourth quarter of 2013, Conventional Pipelines'
throughput averaged 500 mbpd, consisting of an average of 369 mbpd of crude oil and condensate and 131 mbpd of NGL. This represents
an increase of approximately four percent compared to the same period of 2012, when average throughput was 480 mbpd. On a full-year
basis, 2013 throughput averaged 492 mbpd compared to 456 mbpd for 2012. The cause of the increased throughput was greater oil and
gas producer activity in Conventional Pipelines' service areas, which led to a number of newly connected facilities and higher
volumes at existing connections and truck terminals. Pembina's Phase I crude oil, condensate and NGL pipeline capacity expansions,
which were placed into service in December 2013, also contributed to the fourth quarter and full-year 2013 results, with December
2013 volumes averaging 538 mbpd compared to 492 mbpd in the prior year.

Financial Performance

During the fourth quarter of 2013, Conventional Pipelines
generated revenue of $111 million, 12 percent higher than the $99 million generated in the same quarter of the previous year. This
increase was primarily due to stronger volumes, new connections and higher tolls, as well as the Phase I expansions noted above
which increased capacity on certain of Pembina's systems beginning in December 2013. For 2013, revenue was $411 million compared
to $339 million during 2012. This 21 percent year-over-year increase was due to the same factors impacting the fourth quarter,
combined with toll increases on certain of Pembina's pipelines which were implemented in early 2013. Further, a Pembina-owned and
operated pipeline system previously captured within the Midstream business is now managed and reported in Conventional Pipelines,
positively impacting revenue by $7 million and $26 million for the fourth quarter and year ended December 31, 2013, respectively.
This had no impact on average throughput as the assets are interconnected to existing Conventional Pipelines systems.

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|Pembina Pipeline Corporation | 
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Operating expenses in the
fourth quarter of 2013 were $52 million compared to $42 million in the fourth quarter of 2012 and $162 million in 2013 compared
to $130 million in 2012. The 24 and 25 percent increases weremainly due to work undertaken
to continue to ensure safe and reliable operations at historically high throughput levels. This includes increased pipeline integrity
and geotechnical activities, as well as seasonal, winter-access pipeline work, higher power costs related to volume growth (particularly
in December 2013) and higher labour costs contributed to the increase.

Operating margin for the fourth quarter of 2013 was $59
million compared to $58 million during the same period of 2012. Operating margin was virtually unchanged due to a commensurate
increase in operating expenses relative to revenue. Full-year operating margin in 2013 grew to $251 million compared to $209 million
for 2012 due to higher revenue driven by growth in volumes as discussed above.

For depreciation and
amortization included in operations during the fourth quarter of 2013, Conventional Pipelines incurred a $6 million expense
compared to an expense of $8 million during the same period of the prior year. The decrease in the comparable period is due
to a re-measurement of the decommissioning provision in excess of the carrying amount of the related asset which resulted in
a credit to depreciation expense.An expense of $12 million was recognized for the year ended December 31, 2013
compared to an expense of $44 million in 2012 with the difference between the periods being due to the same factor noted
above.

For the three months ended December 31, 2013, Pembina recognized
an unrealized loss on commodity-related derivative financial instruments of $1 million compared to an unrealized gain of $1 million
in the fourth quarter of 2012. For the full-year of 2013, Pembina recognized an unrealized gain on commodity-related derivative
financial instruments of $1 million compared to an unrealized loss of $9 million for 2012. The 2013 unrealized gain is the result
of Pembina's forward fixed-price power purchase program which is designed to mitigate operating costs fluctuations.

For the three and twelve months ended December 31, 2013,
gross profit was $52 million and $240 million, respectively, compared to $51 million and $156 million, respectively, during the
same periods in 2012. For the fourth quarter, gross profit was impacted by higher revenue which was offset by increased operating
expenses. The full-year increase was primarily due to higher operating margin and decreased depreciation and amortization included
in operations.

Capital expenditures for the fourth quarter and full-year
of 2013 totalled $126 million and $325 million, respectively, compared to $88 million and $187 million for the same periods of
2012. The majority of this spending relates to the expansion of certain pipeline assets as described below, as well as the completion
of several new connections to bring additional producer volumes on-line.

New Developments

Pembina is pursuing numerous crude oil, condensate and
NGL expansions on its Conventional Pipelines systems to accommodate increased customer demand and address constrained pipeline
capacity in several areas of the WCSB.

Late in the fourth quarter of 2013, Pembina completed
construction of its Phase I NGL Expansion, which expanded NGL capacity by 52 mbpd on the Peace and Northern pipelines (the "Peace/Northern
NGL System"), bringing total capacity on these systems to 167 mbpd as of December 2013. The Company also completed its Phase
I crude oil and condensate expansion on its Peace Pipeline between Fox Creek and Edmonton, Alberta providing an additional 40 mbpd
of crude oil and condensate capacity on this segment in December 2013.

7











|Pembina Pipeline Corporation | 
|---------------------------- | 



Pembina is also progressing its previously announced Phase
II expansions. The Phase II NGL Expansion of its Peace/Northern NGL System is expected to increase capacity of the system from
167 mbpd to 220 mbpd. Subject to obtaining regulatory and environmental approvals, Pembina expects the Phase II NGL Expansion to
be complete in mid-2015. The Phase II crude oil and condensate expansion on its Peace Pipeline (the "Phase II LVP Expansion")
is expected to increase capacity of the system from 195 mbpd to 250 mbpd. Subject to obtaining regulatory and environmental approvals,
Pembina expects the Phase II LVP Expansion to be complete in late-2014.

On September 16, 2013, in response to requests from area
producers for firm service between Simonette and Fox Creek, Alberta, Pembina announced plans to proceed with a $115 million expansion
of its Peace Pipeline System (the "Simonette Pipeline Expansion"). This expansion is expected to initially deliver approximately
40 mbpd of additional liquids to Pembina's Fox Creek Terminal from which it will access the Company's previously announced Phase
I and II Peace Pipeline mainline expansions to reach Edmonton-area markets. The new pipeline will have a capacity of approximately
150 mbpd and is expected to be in service in the third quarter of 2014.

The Simonette Pipeline Expansion will include approximately
60 km of 16-inch pipeline along the Company's existing right-of-way, providing service to producers developing the regional Montney
and Duvernay resource plays. Once complete, Pembina will have three pipelines in the corridor capable of segregating and shipping
various grades of crude oil, condensate and NGL. Pembina believes the addition of this 16-inch pipeline will provide suitable capacity
in the area for projected volume growth.

On December 16, 2013, the Company announced having reached
binding commercial agreements to proceed with constructing approximately $2 billion in pipeline expansions (the "Phase III
Expansion"). The Phase III Expansion is underpinned by long-term take-or-pay transportation services agreements with 30 customers
in Pembina's operating areas and is expected to be in-service between late-2016 and mid-2017, subject to environmental and regulatory
approvals. The 540 km Phase III Expansion will follow and expand upon certain segments of the Company's existing pipeline systems
from Taylor, British Columbia southeast to Edmonton, Alberta to fulfill capacity needs for Pembina's customers, with priority being
placed on areas where debottlenecking is essential.

The core of the Phase III Expansion will entail constructing
a new 270 km 24 inch diameter pipeline from Fox Creek, Alberta to the Edmonton area, which is expected to have an initial capacity
of 320 mbpd and an ultimate capacity of over 500 mbpd with the addition of midpoint pump stations. Once complete, Pembina will
have three distinct pipelines in the Fox Creek to Edmonton, Alberta corridor. With the Company's existing pipelines and current
expansions, these three pipelines (which will be part of the Peace and Northern systems) are expected to have the designed capacity
to transport up to approximately 1,000 mbpd if fully expanded. The Phase III Expansion also contemplates increasing pipeline interconnectivity
between Edmonton and Fort Saskatchewan, including Pembina's Redwater and Heartland Hub sites as well as third-party delivery points
in these areas. This interconnectivity is expected to provide the option for customers to access a broad variety of delivery points
including fractionators, refineries and storage hubs, as well as increased access to pipeline and rail take-away capacity.

The contracts underpinning the Phase III Expansion
are generally ten-year transportation services agreements for volumes that average over 230 mbpd, or approximately 75 percent
of the initial planned capacity, and that are expected to provide a steady, long-term EBITDA stream. The Company anticipates
securing further pipeline transportation commitments over the next four  to  six months while it refines the project scope.
Any additional commitments made before the Company begins to order long-lead equipment would support increasing the design
capacity of the Phase III Expansion.

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|Pembina Pipeline Corporation | 
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Oil Sands & Heavy Oil

|                                                     | 3 Months Ended
        December 31
        (unaudited) | 12 Months Ended
        December 31
|---------------------------------------------------- | ------------------------------------------------------ | -----------------------------------
|($ millions, except where noted)                     | 2013                                                   | 2012                               
|Contracted capacity, end of period (mbpd)            | 880                                                    | 870                                
|Revenue                                              | 52                                                     | 46                                 
|Operating expenses                                   | 19                                                     | 16                                 
|Operating margin(1)                                  | 33                                                     | 30                                 
|Depreciation and amortization included in operations | 2                                                      | 5                                  
|Gross profit                                         | 31                                                     | 25                                 
|Capital expenditures                                 | 5                                                      | 18                                 

| | (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 crude oil for Syncrude Canada Ltd. (via the Syncrude Pipeline)
and Canadian Natural Resources Ltd.'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 capacity 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

The Oil Sands &
Heavy Oil business realized revenue of $52 million in the fourth quarter of 2013 compared to $46 million in the fourth
quarter of 2012. Full-year revenue in 2013 was $195 million compared to $172 million for 2012.Revenue for the fourth
quarter and year ended December 31, 2013 was higher than the comparable periods of the prior year largely because of
increased contribution from the Nipisi Pipeline which resulted from a new pump station being placed into service and enabled
the transportation of volumes above contracted levels since being brought on-stream in the second quarter of 2013.

Operating expenses were $19 million during the fourth quarter
of 2013 compared to $16 million during the fourth quarter of 2012. For the year ended December 31, 2013, operating expenses were
$64 million compared to $55 million for the full-year of 2012. Additional power and maintenance costs were the main reasons for
the increase in operating expenses for both the fourth quarter and full-year of 2013.

For the three and twelve
months ended December 31, 2013, operating margin grew to $33 million and $131 million from $30 million and $117 million, respectively,
generated during the same periods in 2012. These increases were primarily due tothe new pump station on the Nipisi Pipeline
which enabled throughput above contracted volumes since being brought on-stream in the second quarter
of 2013.

9





|Pembina Pipeline Corporation | 
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For the three and twelve months ended December 31, 2013,
gross profit was $31 million and $114 million, respectively, compared to $25 million and $97 million, respectively, during the
same periods of 2012. These increases were primarily due to higher operating margin in the quarter and full-year, as discussed
above.

For the year ended December
31, 2013, capital expenditures within the Oil Sands & Heavy Oil business totalled $38 million and were primarily
related to the construction of additional pump stations in the Slave Lake, Alberta, area on the Nipisi and Mitsue pipelines. This
compares to $30 million spent during 2012, which also related to the Nipisi and Mitsue pipelines.

New Developments

Pembina continues to move forward with work related to
its previously announced $35 million engineering support agreement ("ESA") to progress a potential new oil sands pipeline
project (the "Cornerstone Pipeline System"). Provided that satisfactory commercial agreements can be reached and that
regulatory and environmental approvals can be obtained thereafter, Pembina expects the Cornerstone Pipeline System could be in-service
in the third quarter of 2017 at an estimated cost of approximately $1 billion. The capital expenditure estimate for the potential
Cornerstone Pipeline System has been increased from its original estimate of $850 million due to the project scope being refined
as the Company has advanced project development and preliminary engineering. Pembina anticipates that the Cornerstone Pipeline
System would also provide integration opportunities and synergies for Pembina's Midstream business, which is expected to be a 50-percent
shipper on the diluent pipeline.

During 2013, Pembina completed an additional pump station
on the Nipisi Pipeline, which increased capacity to 105 mbpd, and an additional pump station on the Mitsue Pipeline, which increased
capacity to 22 mbpd.

Gas Services

|                                                         | 3 Months Ended
        December 31
        (unaudited) | 12 Months Ended
        December 31
|-------------------------------------------------------- | ------------------------------------------------------ | -----------------------------------
|($ millions, except where noted)                         | 2013                                                   | 2012                               
|Average
    volume processed (MMcf/d) net to Pembina(1)  | 397                                                    | 276                                
|Average
    volume processed (mboe/d) (2) net to Pembina | 66                                                     | 46                                 
|Revenue                                                  | 33                                                     | 23                                 
|Operating expenses                                       | 12                                                     | 9                                  
|Operating margin(3)                                      | 21                                                     | 14                                 
|Depreciation and amortization included in operations     | 7                                                      | 4                                  
|Gross profit                                             | 14                                                     | 10                                 
|Capital expenditures                                     | 56                                                     | 77                                 

| | (1) | Volumes at Musreau exclude deep cut processing as those volumes are counted when they are processed through the shallow cut
portion of the plant.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Average volume processed converted to mboe/d from MMcf/d at a 6:1 ratio.
| | --- | ------------------------------------------------------------------------

| | (3) | 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 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 these processes are
transported on Pembina's Conventional Pipelines. Operating assets in this business include:

10











|Pembina Pipeline Corporation | 
|---------------------------- | 



| | • | Pembina's Cutbank Complex - located near Grand Prairie, Alberta, this facility includes three shallow cut sweet gas processing
plants (the Cutbank Gas Plant, the Musreau Gas Plant and the Kakwa Gas Plant) and one deep cut gas processing plant (the Musreau
Deep Cut Facility). In total, the Cutbank Complex has 425 MMcf/d of processing capacity (368 MMcf/d net to Pembina) and 205 MMcf/d
of ethane-plus extraction capacity. This facility also includes approximately 350 km of gathering pipelines.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Pembina's Saturn I Facility - located near Hinton, Alberta, this facility includes 200 MMcf/d of ethane-plus extraction
                                                                                                                                                  capacity as well as approximately 25 km of gathering pipelines.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Cutbank Complex and Saturn I Facility are connected
to Pembina's Peace Pipeline system. The Company continues to progress construction and development of numerous other facilities
in its Gas Services business to meet the growing needs of producers in west central Alberta, as discussed in more detail below.

Operational Performance

Average volumes processed, net to Pembina, was 397
MMcf/d during the fourth quarter of 2013, approximately 44 percent higher than the 276 MMcf/d processed during the fourth
quarter of the previous year. On a full-year basis, volumes increased 16 percent to 319 MMcf/d compared to 275 MMcf/d in
2012. This growth was caused by new volumes from the Saturn I Facility being placed into service along with sustained
activity by producers in the surrounding areas and their focus on liquids-rich natural gas due to its higher price relative
to dry gas.

Financial Performance

Gas Services contributed $33 million in revenue
during the fourth quarter of 2013, approximately 43 percent higher than the $23 million generated in the fourth quarter of
2012. For the full-year of 2013, revenue was $121 million compared to $88 million in 2012. These increases primarily reflect
the Saturn I Facility being placed into service in the  fourth quarter of 2013, as well as higher processing fees and
operating recoveries at the Company's Musreau shallow and deep cut facilities. Revenue was also greater as a result of the
Company investing additional capital in these facilities to meet producer demand. Further, at the Cutbank Complex, the
Musreau deep cut facility and shallow cut expansion were brought on-stream  early in September of 2012 and have operated
throughout 2013.

During the fourth quarter of 2013, operating expenses were
$12 million compared to $9 million incurred in the fourth quarter of 2012. Full-year operating expenses in 2013 totalled $43 million,
up from $29 million during the prior year. The quarterly and full-year increases were mainly due to additional power, labour and
maintenance costs associated with new assets being in-service as well as higher volumes and increased activity at the expanded
Cutbank Complex.

Gas Services realized an operating margin of $21 million
in the fourth quarter and $78 million in the full-year of 2013, respectively, compared to $14 million and $59 million, respectively,
during the same periods of the prior year. These increases are the result of new assets being placed into service and the associated
new volumes, higher throughput at the Cutbank Complex and the collection of additional fees for capital invested.

Depreciation and amortization included in operations during
the fourth quarter of 2013 totalled $7 million, up from $4 million during the same period of the prior year, primarily due to higher
in-service assets from capital additions to the Cutbank Complex (including the Musreau deep cut facility and shallow cut expansion)
and the new Saturn I Facility. For the same reason, depreciation and amortization included in operations totalled $20 million in
2013 compared to $15 million in 2012.

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|Pembina Pipeline Corporation | 
|---------------------------- | 



For the three months ended December 31, 2013, gross profit
was $14 million compared to $10 million in the same period of 2012, and was $58 million for the full-year of 2013 compared to $44
million in 2012. These increases reflect higher operating margin during the 2013 periods.

For the year ended December 31, 2013, capital expenditures
within Gas Services totalled $258 million compared to $163 million during the same period of 2012. This increase in spending was
primarily to complete the Saturn I Facility and to progress the multi-year construction projects at Resthaven, Saturn II, and Musreau
II which are discussed below.

New Developments

During 2013, Pembina completed and commissioned its Saturn
I Facility (a 200 MMcf/d deep cut processing plant) and its associated pipelines and infrastructure. The facility, which has the
capability of extracting up to 13.5 mbpd of NGL, was fully operational as of late-October 2013.

In 2014, Pembina's Gas Services business plans to spend
approximately $260 million to progress new facilities and associated infrastructure. Pembina expects the expansions detailed below
to bring the Company's Gas Services processing capacity to approximately 1.2 bcf/d (net) by the end of 2015 which includes ethane-plus
extraction capacity of approximately 735 MMcf/d (net). The volumes from Pembina's existing assets and those under development would
be processed largely on a contracted, fee-for-service basis and could result in an addition of approximately 55 mbpd of NGL, subject
to gas compositions, to be transported for toll revenue on Pembina's Conventional Pipelines once the projects are complete.

| | • | Resthaven Facility - a 200 MMcf/d (134 MMcf/d net to Pembina) combined shallow cut and deep cut NGL extraction facility, which
is expected to cost approximately $240 million (net to Pembina);
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | Saturn II Facility - a 200 MMcf/d 'twin' of the Saturn I Facility, which is expected to cost approximately $170 million; and,
| | - | -----------------------------------------------------------------------------------------------------------------------------

| | • | Musreau II Facility - a 100 MMcf/d shallow cut gas plant and associated infrastructure, which is expected to cost approximately
$110 million.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------

Pembina is progressing construction of the Resthaven Facility
with 100 percent of major equipment ordered and expects to bring the facility and associated pipelines into service in the third
quarter of 2014. Once operational, the Company expects the Resthaven Facility will have the capability to extract up to 13 mbpd
of NGL.

The Saturn II Facility will leverage the engineering
work completed for the Saturn I Facility and is expected to be in-service by late-2015. Pembina has received the
required regulatory and environmental approvals and is progressing construction of the facility with over 65 percent of the
major equipment ordered. The Company expects the Saturn II Facility will have the capability to extract up to 13.5 mbpd of
NGL which will be transported, using excess capacity, on the same liquids pipeline lateral Pembina constructed for the Saturn
I Facility.

On August 9, 2013, Pembina announced that it
is pursuing the Musreau II Facility, a new 100 MMcf/d shallow cut gas plant with associated NGL and gas gathering pipelines
near its existing Musreau Gas Plant (part of the greater Cutbank Complex). The Musreau II Facility is underpinned by
long-term take-or-pay agreements with area producers. The facility is designed to extract propane-plus (C3+) and
could deliver up to approximately 4.2 mbpd of NGL for transportation on Pembina's Conventional Pipelines. Pembina has
received the required regulatory and environmental approvals, construction is underway with 100 percent of the major
equipment ordered and Pembina expects the Musreau II Facility to be in-service in the first quarter of 2015.

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|Pembina Pipeline Corporation | 
|---------------------------- | 



Midstream

|                                                                             | 3 Months Ended
        December 31
        (unaudited) | 12 Months Ended
        December 31(1)
|---------------------------------------------------------------------------- | ------------------------------------------------------ | --------------------------------------
|($ millions, except where noted)                                             | 2013                                                   | 2012                                  
|NGL
    sales volume (mbpd)                                                  | 122                                                    | 116                                   
|Revenue                                                                      | 1,117                                                  | 1,103                                 
|Cost of goods sold, including product purchases                              | 933                                                    | 974                                   
|Net revenue(2)                                                               | 184                                                    | 129                                   
|Operating expenses                                                           | 19                                                     | 20                                    
|Realized gain (loss) on commodity-related derivative financial instruments   | (3)                                                    | 10                                    
|Operating margin(2)                                                          | 162                                                    | 119                                   
|Depreciation and amortization included in operations                         | 27                                                     | 31                                    
|Unrealized gain (loss) on commodity-related derivative financial instruments | 3                                                      | (3)                                   
|Gross profit                                                                 | 138                                                    | 85                                    
|Capital expenditures                                                         | 87                                                     | 77                                    

| | (1) | Share of profit from 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 targets oil and diluent-related
development opportunities at key sites across Pembina's network and comprises 16 truck terminals (including two capable of emulsion
treatment and water disposal), terminalling at downstream hub locations, storage, crude oil by rail services and the Pembina Nexus
Terminal ("PNT"). PNT includes: 21 inbound pipeline connections; 13 outbound pipeline connections; in excess of 1.2 million
bpd of crude oil and condensate supply connected to the terminal; and 310,000 barrels of surface storage in and around the Edmonton,
Alberta area.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | • | The Redwater West NGL system includes the Younger extraction and fractionation facility in B.C.; a 73 mbpd NGL fractionator
and 7.8 mmbblsof 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 specification NGL and crude oil.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | The Empress East NGL system includes a 2.1 bcf/d capacity in the straddle plants at Empress, Alberta; 20 mbpd of fractionation
capacity and 1.1 mmbbls of cavern storage in Sarnia, Ontario; and ownership of 5.1 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 fractionation, distribution and sale. Propane and butane are sold into central
Canadian and eastern U.S. markets.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



13











|Pembina Pipeline Corporation | 
|---------------------------- | 



The financial performance of NGL midstream can be
affected by the seasonal demand for propane. 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 and
butane are generally sold consistently throughout the year.

Financial Performance

In the Midstream business
net revenue grew to $184 million during the fourth quarter of 2013 from $129 million during the fourth quarter of 2012. For the
most part, the increase is due to higher propane prices which resulted from lower inventories in North America in the 2013 period
compared to 2012. Full-year net revenue in 2013 was $580 million compared to $353 million in 2012. This increase was primarily
due to a full-year of results generated by the NGL assetsin 2013 compared to 2012, which only captured nine months of
results due to the timing of the Acquisition, along with improved propane pricing. Stronger margins
and increased storage opportunities for crude oil and condensate in the first quarter of 2013 also contributed to the full-year
increase.

Operating expenses during
the fourth quarter and full-year of 2013 were $19 million and $91 million, respectively, compared to $20 million and $60 million
in the comparable periods of 2012. Full-year operating expenses were higher primarily due tothe increase in Midstream's asset base since theAcquisition.

Operating margin was $162
million during the fourth quarter of 2013 and $486 million during the full-year compared to $119 million and $288 millionin
the respective periods of 2012. These increases primarily related to growth in revenue and were
partially offset by higher operating expenses, as discussed above.

The Company's crude oil midstream operating margin grew
to $48 million compared to $45 million in the same period of 2012 (both periods included a $1 million realized gain on commodity-related
derivative financial instruments). This increase was largely due to stronger margins and new services such as crude oil unit train
loading, as well as improved volumes at Pembina's truck and full-service terminals during the quarter. For the year ended December
31, 2013, crude oil midstream's operating margin totalled $147 million including a $2 million realized loss on commodity-related
derivative financial instruments compared to $132 million including a $1 million gain on commodity-related derivative financial
instruments during the prior year. The full-year increase was primarily driven by both higher volumes and activity on Pembina's
pipeline systems, robust demand for midstream services and wider margins (particularly in the first quarter of the year), the
Company's crude oil unit train service offering and increased throughput at the crude oil midstream truck terminals.

Operating margin for Pembina's NGL midstream activities
was $114 million for the fourth quarter of 2013, including a $4 million realized loss on commodity-related derivative financial
instruments (see "Market Risk Management Program") compared to $74 million for the fourth quarter of 2012, including
a $9 million realized gain on commodity-related derivative financial instruments. For the year ended December 31, 2013, operating
margin for NGL midstream was $339 million, including a $1 million realized loss on commodity-related derivative financial instruments
compared to $156 million, which included a realized loss on commodity-related derivative financial instruments of $6 million,
for the same period of 2012.

14









|Pembina Pipeline Corporation | 
|---------------------------- | 



At 122 mbpd, fourth quarter 2013 NGL sales volumes were
five percent higher than the same period in 2012, with the increase largely attributable to ethane and butane product sales.

Operating margin from Redwater West during the fourth quarter
of 2013, excluding realized losses from commodity-related derivative financial instruments, was $71 million compared to $48 million
in the fourth quarter of 2012. The increase was primarily driven by a stronger year-over-year market for propane. Overall, Redwater
West NGL sales volumes averaged 69 mbpd in the fourth quarter of 2013 compared to 72 mbpd in the fourth quarter of 2012. The decrease
in sales volumes primarily related to an operational issue with one of the feedstock caverns for the fractionator. While this issue
had restricted production rates, it did not impact any of Pembina's NGL sales commitments. The feedstock cavern issue was resolved
subsequent to year-end in early January 2014.

Operating margin from Empress East during the fourth quarter
of 2013, excluding realized losses from commodity-related derivative financial instruments, was $47 million compared to $17 million
in the same quarter in 2012. These improved results were largely attributable to the strong year-over-year 2013 propane market
and lower inventory acquisition costs at Empress.Overall, Empress East NGL sales volumes averaged 53 mbpd in the fourth
quarter of 2013 compared to 44 mbpd in the fourth quarter of 2012.

Depreciation and amortization
included in operations during the fourth quarter of 2013 totalled $27 million compared to $31 million during the same period of
the prior year. The decrease primarily reflects assets previously in the Midstream business which are now accounted for in Conventional
Pipelines, as previously discussed. Full-year depreciation and amortization included in operations totalled $114 million, up from
$95 million for 2012. The full-year increase reflects the additional assets in this business since the closing of theAcquisition.

In the fourth quarter of 2013, unrealized gains
on commodity-related derivative financial instruments relating to the Midstream business were $3 million compared to
an unrealized loss of $3 million for the three months ended December 31, 2012. Full-year unrealized gains on
commodity-related derivative financial instruments were $6 million in 2013 compared to $45 million in the prior year. The
significant changes in unrealized losses and gains on commodity-related derivative financial instruments which were recognized
in the three and twelve month periods ended December 31, 2013, respectively, reflect the reduction in the future NGL price
indices between April 2, 2012 (the date of the Acquisition) and December 31, 2012.

For the three and twelve months ended December 31, 2013,
gross profit in this business was $138 million and $378 million compared to $85 million and $238 million, respectively, during
the same periods in 2012 due to the factors impacting revenue, operating expenses, depreciation and amortization included in operations
and unrealized gains (losses) on commodity-related derivative financial instruments noted above.

For the twelve months ended December 31, 2013,
capital expenditures within the Midstream business totalled $254 million compared to $204 million during  2012. Capital
spending in this business was primarily directed towards the development of Pembina's second fractionator, storage caverns
and associated infrastructure and unit train capability at Redwater, the build-out of Pembina's full-service terminal
network, the acquisition of the Heartland Hub (as defined below) and increased interconnectivity and optionality at
PNT.

15







|Pembina Pipeline Corporation | 
|---------------------------- | 



New Developments

Market demand for products and services in the Midstream
space is strong for both crude oil and NGL. The capital being deployed in the Midstream business is primarily directed towards
fee-for-service projects.

On September 3, 2013, Pembina announced the acquisition
of a $20 million site in the Alberta Industrial Heartland featuring existing rail access and utility infrastructure to support
the future development of rail, terminalling and storage facilities (the "Heartland Hub"). The Heartland Hub is a further
build-out of PNT, servicing crude oil and diluent customers for terminalling, storage and rail.

At the same time, Pembina announced entering into a multi-year,
fee-for-service agreement with a major North American refiner under which Pembina will provide rail loading services for up to
40 mbpd of pipeline-connected crude oil grades at the Company's Redwater facility. The Company has been moving unit train outbound
deliveries since the end of October, 2013.

Regarding Pembina's previously announced $415 million
RFS II project (a second 73 mbpd fractionator at Pembina's Redwater site), the Company continued to progress with facility construction
and associated feed cavern development during the fourth quarter. To-date, the site has been stripped and graded, the facility
roadways and parking lots have been laid out, the storm water pond has be dug and lined, and the construction facilities are substantially
complete. Pembina expects to have contractors mobilized and on site to begin construction in April, 2014 and to be able to bring
RFS II into service in the fourth quarter of 2015.

Market
Risk Management Program

Pembina’s results are subject to movements in
commodity prices, foreign exchange and interest rates. A formal Risk Management Program including policies and procedures has
been designed to mitigate these risks.

Commodity price risk

Pembina's Midstream business is exposed to changes
in commodity prices as a result of frac spread risk or the relative price differential between the input cost of the natural
gas required to produce NGL products and the price at which they are sold. Pembina responds to commodity price risk by
using an active Risk Management Program to fix revenues on a minimum of 50 percent of the committed term natural gas supply
costs. Pembina's Midstream business is also exposed to variability in quality, time and location differentials. The Company
utilizes 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.

Foreign exchange risk

Pembina’s commodity-related cash flows are subject
to currency risk, primarily arising from the denomination of specific earnings and cash flows in U.S. dollars. Pembina responds
to 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.

(For more information on financial instruments and financial
risk management, see Note 22 to the Consolidated Financial Statements.)

16







|Pembina Pipeline Corporation | 
|---------------------------- | 



Non-Operating
Expenses

G&A

Pembina incurred G&A (including corporate depreciation
and amortization) of $43 million during the fourth quarter of 2013, up from $27 million during the fourth quarter of 2012. This
increase was primarily due to the addition of new employees as a result of Pembina's growth since the prior period as well as increased
short-term and share-based incentive expenses as a result of a 10 percent increase in the Company's share price ($3.28 per share)
during the fourth quarter. Full-year 2013 G&A totaled $132 million compared to $97 million in 2012. The increase for the full-year was mainly due to higher salary and incentive expenses as a result of additional employees (approximately 20 percent) due
to the Company's growth and the Acquisition and a 31 percent increase in Pembina's share price ($8.96 per share) at December 31,
2013 compared to December 31, 2012. Every $1 change in share price is expected to change Pembina's annual share-based incentive
expense by approximately $1 million.

Depreciation & Amortization Included in Operations

Depreciation and amortization included in operations decreased
to $42 million during the fourth quarter of 2013 compared to $48 million during the same period in 2012. For
the year ended December 31, 2013, depreciation and amortization included in operations was $163 million, down from $174 million
last year. The variances during the quarter and full-year compared to the same periods of 2012 are primarily due to a re-measurement
of the decommissioning provision in excess of the carrying amount of the related asset which was recognized as a $33 million credit
to depreciation expense (in Conventional Pipelines) for 2013 (2012: $6 million) and was offset by depreciation from new assets.

Net Finance Costs

Net finance costs in the
fourth quarter of 2013 were $55 million compared to $36 million in the fourth quarter of 2012. The increase is primarily attributed
to an unrealized loss relating to the conversion feature of Pembina's outstanding convertible debentures due to the Company's higher
common share price in 2013, which was offset by lower interest expense on loans and borrowings.Full-year net finance costs
in 2013 totalled $166 million in 2013, up from $115 million in 2012. The increase is due to a loss
on the conversion feature of convertible debentures of $71 million, which was partially offset by a reduction in interest on loans
and borrowings of $18 million. Interest expense on loans and borrowings totalled $55 million in 2013, down
from $73 million in 2012, reflecting reduced borrowing levels.

Income Tax Expense

Income tax expense was $41
million for the fourth quarter of 2013, including current taxes of $19 million and deferred taxes of $22 million, compared to deferred
taxes of $27 million in the same period of 2012.Full-year income tax expense totalled $143 million including current taxes
of $38 million and deferred taxes of $105 million, up from $75 million of deferred taxes in the same period of 2012.The current taxes increased during the year primarily because taxable income exceeded available deductions. Deferred income
tax expense arises from the difference between the accounting and tax basis of assets and liabilities.

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 2013, the pension plans carried an obligation of $2 million
compared to an obligation of $28 million at the end of 2012. At December 31, 2013, plan obligations amounted to $126 million
(2012: $128 million) compared to plan assets of $124 million (2012: $100 million). In 2013, the pension plans' expense was
$10 million (2012: $7 million). Contributions to the pension plans totaled $13 million in 2013 and $10 million in 2012.

In 2014, contributions to the pension plans are expected
to be $10 million and the pension plans' net expenses are anticipated to be $9 million. Management anticipates an annual increase
in compensation of 4 percent, which is consistent with current industry standards.

17







|Pembina Pipeline Corporation | 
|---------------------------- | 



Liquidity
& Capital Resources

|($ millions)                                                 | December 31, 2013 | December 31, 2012
|------------------------------------------------------------ | ----------------- | -----------------
|Working capital                                              | (170)(3)          | 66               
|Variable rate debt(1)(2)                                     |                   |                  
|Bank debt                                                    | 50                | 525              
|Total variable rate debt outstanding (average rate of 2.67%) | 50                | 525              
|Fixed rate debt(1)                                           |                   |                  
|Senior unsecured notes                                       | 642               | 642              
|Senior unsecured term debt                                   | 75                | 75               
|Senior unsecured medium-term notes                           | 900               | 700              
|Subsidiary debt                                              | 8                 | 9                
|Total fixed rate debt outstanding (average of 4.99%)         | 1,625             | 1,426            
|Convertible debentures(1)                                    | 633               | 644              
|Finance lease liability                                      | 9                 | 6                
|Total debt and debentures outstanding                        | 2,317             | 2,601            
|Cash and unutilized debt facilities                          | 1,531             | 1,032            

| | (1) | Face value.
| | --- | -----------

| | (2) | Pembina maintains derivative financial instruments to manage exposure to variable interest rates. See "Market Risk Management
Program."
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------

| | (3) | As at December 31, 2013, working capital includes $262 million (December 31, 2012: $12 million) associated with the current
portion of loans and borrowings.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------

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. In the short-term,
Pembina expects to source funds required for capital projects from cash and cash equivalents and unutilized debt facilities totalling
$1,531 million as at December 31, 2013. In addition, based on its successful access to financing in the debt and equity markets
over the past several years, Pembina believes it would continue to have access to funds at attractive rates, if and when required.
Management remains satisfied that the leverage employed in Pembina's capital structure 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. See "Risk Factors - Additional Financing and Capital Resources" and "Risk Factors - Debt Service."

Pembina's credit facilities at December 31, 2013
consisted of an unsecured $1.5 billion revolving credit facility due March 2018 and an operating facility of $30 million due
July 2014 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 or Bankers' Acceptances rates plus 1.00 percent 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, 2013, Pembina had $50 million drawn on bank debt,
leaving $1,480 million of unutilized debt facilities on the $1,530 million of established bank facilities. Pembina also had
an additional $8 million in letters of credit issued in a separate demand letter of credit facility. At December 31, 2013,
Pembina had loans and borrowing (excluding amortization, letters of credit and finance lease liabilities) of $1,675 million.
Pembina's senior debt to total capital at December 31, 2013 was 22 percent. Pembina is required to meet certain specific
financial covenants under its senior unsecured notes, medium-term notes and revolving credit and operating 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. All notes and facilities are governed by specific and customary
affirmative and negative financial covenants and require the  Company to maintain certain financial ratios, all of which
Pembina has been in compliance with during the years ended December 31, 2013 and 2012.

18







|Pembina Pipeline Corporation | 
|---------------------------- | 



On March 21, 2013, Pembina announced that it had closed
its bought deal offering of 11,206,750 common shares at a price of $30.80 per share through a syndicate of underwriters, which
includes 1,461,750 common shares issued at the same price on the exercise in full of the over-allotment option granted to the underwriters.
The aggregate gross proceeds from the offering was approximately $345 million. The net proceeds from the offering were used to
reduce the Company's debt.

On April 30, 2013, Pembina closed the offering of $200
million 30-year senior unsecured medium-term notes ("Notes"). The Notes have a fixed interest rate of 4.75 percent per
annum paid semi-annually, and will mature on April 30, 2043.

On July 26, 2013, Pembina closed its offering
of 10,000,000 cumulative redeemable rate reset class A preferred shares, series 1 (the "Series 1 Preferred Shares")
at a price of $25.00 per share. The Series 1 Preferred Shares began trading on the Toronto Stock Exchange  the same day under
the symbol PPL.PR.A.

On October 2, 2013, Pembina closed its offering of 6,000,000
cumulative redeemable rate reset class A preferred shares, series 3 (the "Series 3 Preferred Shares") at a price of $25.00
per share. The Series 3 Preferred Shares began trading on the Toronto Stock Exchange  the same day  under the symbol PPL.PR.C.

The Company used the proceeds from the offerings to partially
fund capital projects, repay amounts outstanding on Pembina's credit facility, and for other general corporate purposes.

Subsequent to year-end, on January 16, 2014, Pembina closed
its offering of 10,000,000 cumulative redeemable rate reset class A preferred shares, series 5 (the "Series 5 Preferred Shares")
at a price of $25.00 per share. Proceeds from the Series 5 Preferred Shares will be used to partially fund Pembina's 2014 capital
expenditure program, including capital expenditures relating to Pembina's current expansions and growth projects, to reduce indebtedness
under the Company's credit facilities, and for general corporate purposes. The Series 5 Preferred Shares began trading on the Toronto
Stock Exchange on January 16, 2014 under the symbol PPL.PR.E.

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 'BBB' and Series
1, Series 3 and Series 5 Preferred Shares Pfd-3. S&P's long-term corporate credit rating on Pembina is 'BBB' and its rating
of the Series 1, Series 3 and Series 5 Preferred Shares is P-3.

19







|Pembina Pipeline Corporation | 
|---------------------------- | 

Capital
Expenditures

|                          | 3
        Months Ended
        December
        31
        (unaudited) | 12 Months Ended
        December 31
|------------------------- | ---------------------------------------------------------------------- | -----------------------------------
|($ millions)              | 2013                                                                   | 2012                               
|Development capital       |                                                                        |                                    
|Conventional Pipelines    | 126                                                                    | 88                                 
|Oil Sands & Heavy Oil     | 5                                                                      | 18                                 
|Gas Services              | 56                                                                     | 77                                 
|Midstream                 | 87                                                                     | 77                                 
|Corporate/other projects  | 1                                                                      | (6)                                
|Total development capital | 275                                                                    | 254                                

During the fourth quarter and full-year 2013, capital expenditures
were $275 million and $880 million, respectively, compared to $254 million and $584 million spent in the same periods of 2012.

The majority of the capital expenditures in the fourth quarter
and full-year of 2013 were in Pembina's Conventional Pipelines, Midstream and Gas Services businesses. Conventional Pipelines'
capital was incurred to complete its Phase I expansion program, progress its numerous other expansions and on various new connections.
Gas Services' capital was deployed to complete the Saturn I Facility and progress the Resthaven, Saturn II and Musreau II facilities.
Midstream's capital expenditures were primarily directed towards RFS II, as well as cavern development and related infrastructure
at the Redwater facility.

With respect to Pembina's planned capital expenditures for
2014, refer to "Conventional Pipelines - New Developments", "Oil Sands & Heavy Oil - New Developments",
"Gas Services - New Developments" and "Midstream - New Developments." Also refer to "Risk Factors - Completion
and Timing of Expansion Projects" and "Possible Failure to Realize Anticipated Benefits of Corporate Strategy."

Contractual
Obligations at December 31, 2013

|($ millions)                     | Payments Due By Period
|-------------------------------- | ----------------------
|Contractual Obligations          | Total                 
|Operating and finance leases     | 548                   
|Loans and borrowings(1)          | 2,379                 
|Convertible debentures(1)        | 850                   
|Construction commitments(2)(3)   | 1,346                 
|Provisions                       | 309                   
|Total contractual obligations(2) | 5,432                 

| | (1) | Excluding deferred financing costs.
| | --- | -----------------------------------

| | (2) | Excluding significant projects that are awaiting regulatory approval.
| | --- | ---------------------------------------------------------------------

| | (3) | Including investment commitments to equity accounted investees of $24 million (2012: nil).
| | --- | ------------------------------------------------------------------------------------------

Pembina is, subject to
certain conditions, contractually committed to the construction and operation of the Saturn II Facility, the Resthaven Facility,
the Musreau II Facility, RFS II, as well as its Phase II and III pipeline expansions and certain caverns at its Redwater site.
See "Forward-Looking Statements & Information."

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.

20







|Pembina Pipeline Corporation | 
|---------------------------- | 

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.

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, intangibles and goodwill in the purchase price analysis. 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 liabilities and timing, scope and amount of liabilities. Management uses judgment in determining the
likelihood of realization of contingent assets and liabilities to determine the outcome of contingencies.

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. In addition, in determining the provision it is
assumed the Company will utilize technology and materials that are currently available.

(iii)	Income 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 apply
to income in the years in which temporary differences are expected to be realized or reversed.

21







|Pembina Pipeline Corporation | 
|---------------------------- | 

(iv)	Depreciation and amortization

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

(v)	Impairment tests

Annual goodwill impairment tests include management's estimates
of future cash flows and discount rates.

Changes
in Accounting Principles and Practices

The Company has adopted the following new standards and
amendments to standards, including any consequential amendments to other standards, as of January 1, 2013. The nature and effects
of the changes are explained below.

a)	IFRS 7 Financial Instruments: Disclosures

As a result of the amendments to IFRS 7, the Company has
expanded its disclosures about the offsetting of financial assets and financial liabilities (see Note 22).

b)	IFRS 13 Fair Value Measurement

IFRS establishes a single framework for measuring fair
value and making disclosures about fair value measurements when such measurements are required or permitted by other IFRSs. The
change had no significant impact on the measurements of the Company's assets and liabilities.

c)	IAS 19 Employment Benefits (2011)

As a result of IAS 19 (2011), the Company has
changed its accounting policy with respect to the basis for determining the income or expense related to its post-employment
defined benefit plan.

Under IAS 19 (2011), the Company determines net
interest expense on the net defined benefit liability for the period by applying the discount rate used to measure the
defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability, taking into
account any changes in the net defined benefit liability during the period as a result of contributions and benefit payments.
Consequently, the net interest on the net defined benefit liability now comprises: interest cost on the defined benefit
obligation and interest income on plan assets. Previously, the Company determined interest income on plan assets based on
their long-term expected rate of return.

The quantitative impact is not material to the financial
statements.

New
Standards and Interpretations Not Yet Adopted

Certain new standards, interpretations, amendments and improvements
to existing standards were issued by the International Accounting Standards Board or IFRS Interpretations Committee ("IFRIC") and are effective for accounting
periods beginning on or after January 1, 2014. These standards have not been applied in preparing these consolidated financial
statements nor does the Company expect to adopt them early. Those which may be relevant to Pembina are described below.

22







|Pembina Pipeline Corporation | 
|---------------------------- | 



IFRS 9 (2010) Financial Instruments does not have
a mandatory effective date but is available for adoption. 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.

IAS 32 Financial Instruments: Presentation is effective
for annual periods beginning on or after January 1, 2014. The Company is currently evaluating the impact that the standard will
have on its results of operations and financial position.

IFRIC 21 Levies interpretation is effective for
annual periods beginning on or after January 1, 2014. The Company is currently evaluating the impact that the standard will have
on its results of operations and financial position.

Controls
and Procedures

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 United States Securities
Exchange Act of 1934, as amended (the "Exchange Act") and under National Instrument 52-109 Certification of Disclosure
in Issuer's Annual and Interim Filings ("NI 52-109").

Management, including the Chief Executive Officer
("CEO") and the Chief Financial Officer ("CFO"), has conducted an evaluation of Pembina’s internal
control over financial reporting based on criteria established in Internal Control - Integrated Framework (1992) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on management’s assessment as at December
31, 2013, management has concluded that Pembina’s internal control over financial reporting is effective.

The effectiveness of internal control over financial reporting
as of December 31, 2013 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 2013 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.

Changes in Internal Control over Financial Reporting

During the year, the Company completed the transition
of internal controls of the entities acquired in the Acquisition. No additional changes were made in Pembina's internal control
over financial reporting during the fiscal year ended December 31, 2013 that have materially affected or are reasonably likely
to materially affect Pembina’s internal control over financial reporting.

Disclosure Controls and Procedures

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

23







|Pembina Pipeline Corporation | 
|---------------------------- | 



An evaluation, as of December 31, 2013, 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 Exchange Act and NI 52-109, was carried out by management, including the CEO and the 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 to
ensure that information required to be disclosed in the reports that Pembina files or submits under the Exchange Act or Canadian
securities legislation is recorded, processed, summarized and reported within the time periods specified in the rules and forms
therein.

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 and 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.

Trading
Activity and Total Enterprise Value(1)

|                                        |  | As at and for the 12 	months ended
|--------------------------------------- |  | ----------------------------------
|($ millions, except where noted)        |  | February
 24, 2014                
|Trading volume and value                |  |                                   
|Total volume (millions of shares)       |  |                                   
|Average daily volume (shares)           |  |                                   
|Value traded                            |  |                                   
|Shares outstanding (millions of shares) |  |                                   
|Closing share price (dollars)           |  |                                   
|Market value                            |  |                                   
|Common shares                           |  |                                   
|Series 1 Preferred Shares (PPL.PR.A)    |  |                                   
|Series 3 Preferred Shares (PPL.PR.C)    |  |                                   
|Series 5 Preferred Shares (PPL.PR.E)    |  |                                   
|5.75% convertible debentures (PPL.DB.C) |  |                                   
|5.75% convertible debentures (PPL.DB.E) |  |                                   
|5.75% convertible debentures (PPL.DB.F) |  |                                   
|Market capitalization                   |  |                                   
|Senior debt                             |  |                                   
|Total enterprise value(17)              |  |                                   

| | (1) | Trading information in this table reflects the activity of Pembina securities on the TSX only.
| | --- | ----------------------------------------------------------------------------------------------

| | (2) | Based on 37 trading days from January 2, 2014 to February 24, 2014, inclusive.
| | --- | ------------------------------------------------------------------------------

| | (3) | 10 million preferred shares outstanding at a market
price of $23.90 at February 24, 2014.
| | --- | -----------------------------------------------------------------------------------------

| | (4) | 10 million preferred shares outstanding at a market price of $24.26 at December 31, 2013.
| | --- | -----------------------------------------------------------------------------------------

| | (5) | 6 million preferred shares outstanding at a market
price of $24.85 at February 24, 2014.
| | --- | ----------------------------------------------------------------------------------------

| | (6) | 6 million preferred shares outstanding at a market price of $25.15 at December 31, 2013.
| | --- | ----------------------------------------------------------------------------------------

| | (7) | 10 million preferred shares outstanding at a market
price of $25.90 at February 24, 2014.
| | --- | -----------------------------------------------------------------------------------------

| | (8) | $297 million principal amount outstanding at a market price of $141.25 at February 24,
                                                                       2014 and with a conversion price of $28.55.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (9) | $298.6 million principal amount outstanding at a market price of $132.63 at December 31, 2013 and with a conversion price of
$28.55.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------

| | (10) | $299.7 million principal amount outstanding at a market
price of $111.00 at December 31, 2012 and with a conversion price of $28.55.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------

| | (11) | $92.3 million principal amount outstanding at a market price of $160.00 at February 24, 2014 and with a conversion price
                                                                        of $24.94.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (12) | $162.5 million principal amount outstanding at a market price of $149.95 at December 31, 2013 and with a conversion price of
$24.94.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------

| | (13) | $172.2 million principal outstanding at a market price
of $117.00 at December 31, 2012 and with a conversion price of $24.94.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------

| | (14) | $171.6 million principal amount outstanding at a market
price of $136.73 at February 24, 2014 and with a conversion price of $29.53.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------

| | (15) | $172 million principal amount outstanding at a market price of $127.50 at December 31, 2013 and with a conversion price of
$29.53.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------

| | (16) | $172.4 million principal outstanding at a market price
of $110.75 at December 31, 2012 with a conversion price of $29.53.
| | ---- | -------------------------------------------------------------------------------------------------------------------------

| | (17) | Refer to "Non-GAAP and Additional GAAP Measures."
| | ---- | -------------------------------------------------



24







|Pembina Pipeline Corporation | 
|---------------------------- | 

As indicated in the previous table, Pembina's total enterprise
value was approximately $14.7 billion at December 31, 2013. The increase from 2012 was primarily due to more common shares outstanding,
an increase in the price of Pembina's common shares and additional securities issued during 2013. The number of issued and outstanding
shares rose to approximately 315 million at the end of 2013 compared to approximately 293 million at the end of 2012 primarily
due to shares issued pursuant to the bought deal financing in the first quarter of 2013 and shares issued under the DRIP.

Common Share Dividends

Pembina announced on August 9, 2013, that it increased its
monthly dividend rate by 3.7 percent from $0.135 per common share per month (or $1.62 annualized) to $0.14 per common share per
month (or $1.68 annualized) effective as of the August 25, 2013 record date. Pembina is committed to providing increased shareholder
returns over time by providing stable dividends and, where appropriate, further increases in Pembina's dividend, subject to compliance
with applicable laws and the approval of Pembina's Board of Directors. Pembina has a history of delivering common share dividend
increases once supportable over the long-term by the underlying fundamentals of Pembina's businesses as a result of, among other
things, accretive growth projects or acquisitions (see "Forward-Looking Statements & Information").

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 will consider earnings, capital requirements, the financial condition of Pembina and other relevant factors.

Eligible Canadian investors may benefit from an enhanced
dividend tax credit afforded to the receipt of dividends, depending on individual circumstances. Dividends paid to eligible U.S.
investors should qualify for the reduced rate of tax applicable to long-term capital gains but investors are encouraged to seek
independent tax advice in this regard.

Preferred Share Dividends

The holders of Series 1 Preferred Shares are entitled to
receive fixed cumulative dividends at an annual rate of $1.0625 per share, 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 to but excluding
December 1, 2018. The dividend rate will reset on December 1, 2018 and every five years thereafter at a rate equal to the sum of
the then five-year Government of Canada bond yield plus 2.47 per cent.

The holders of Series 3 Preferred Shares are entitled to
receive fixed cumulative dividends at an annual rate of $1.1750 per share, 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 to but excluding
March 1, 2019. The dividend rate will reset on March 1, 2019 and every five years thereafter at a rate equal to the sum of the
then five-year Government of Canada bond yield plus 2.60 per cent.

The holders of Series 5 Preferred Shares are entitled to
receive fixed cumulative dividends at an annual rate of $1.25 per share, payable quarterly on the 1st day of March, June, September
and December, as and when declared by the Board of Directors of Pembina, for the initial fixed rate period to but excluding June
1, 2019. The first quarterly dividend payment date is scheduled for March 1, 2014. The dividend rate will reset on June 1, 2019
and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 3.00 per
cent.

25







|Pembina Pipeline Corporation | 
|---------------------------- | 



DRIP

Eligible Pembina shareholders have 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") equal to 102
percent of the amount of reinvested dividends, pursuant to the "Premium DividendTM Component" of the DRIP. Additional
information about the terms and conditions of the DRIP can be found at www.pembina.com.

Participation in the DRIP for the fourth quarter of 2013
was approximately 57 percent of common shares outstanding for proceeds of approximately $75 million. For the full-year of 2013,
participation was also approximately 57 percent of common shares outstanding for proceeds of approximately $286 million.

Risk Factors

Pembina's value proposition is based on maintaining a
low risk profile. In addition to contractually eliminating the majority of its business risk, Pembina has a formal Risk
Management Program including policies, procedures and systems designed to mitigate any residual risks, such as market risk,
counterparty credit risk and operational risk. For a full discussion of the risk factors affecting the business and operation
of Pembina and its operating subsidiaries, readers are referred to 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. Additional
discussion about market risk, counterparty risk, liquidity risk and additional information on financial risk management can
be found  in Note 22 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.

RISKS INHERENT IN PEMBINA'S BUSINESS

Operational Risks

Operational risks include: pipeline leaks; the breakdown
or failure of equipment, information systems or processes; 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 pipelines; and catastrophic
events such as natural disasters, fires, explosions, fractures, acts of terrorists and saboteurs, and other similar events, many
of which are beyond the control of Pembina. The occurrence or continuance of any of these events could increase the cost of operating
Pembina's assets or reduce revenue, thereby impacting earnings.

Reputation

Reputational risk is the potential for negative impacts
that could result from 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 business and its securities. Reputational risk cannot be managed in isolation from other forms of risk. Credit, market,
operational, insurance, liquidity and regulatory and legal risks 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,
especially other pipeline companies, over which it has no control. In particular, Pembina's reputation could be impacted by negative
publicity related to pipeline incidents, unpopular expansion plans, and due to opposition from organizations opposed to oil sands
development and 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 & 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 compounds 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.

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 the Company'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 the Company. In addition, the costs of environmental liabilities
in relation to spill sites of which the Company is currently aware could be greater than the Company currently anticipates, and
any such differences could be substantial. If the Company 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 the Convertible
Debentures and the Company's other debt obligations could be adversely affected.

While the Company 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 the Company is unaware of a problem or is unable to locate the problem within
the relevant time period, insurance coverage may not be available. However, Pembina believes it has adequate leak detection systems
in place to detect and monitor a significant spill.

27







|Pembina Pipeline Corporation | 
|---------------------------- | 

Abandonment Costs

The Company is responsible for compliance with all applicable
laws and regulations regarding the abandonment of its pipeline 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. However, it is not possible to predict abandonment costs since they will
be a function of regulatory requirements at the time and the value of the Company's assets, including line fill, may then be more
or less than abandonment costs. The Company may, in the future, determine it prudent or be required by applicable laws or regulations
to establish and fund one or more 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 the Convertible Debentures and the Company's
other debt obligations.

Pembina continues to work with the NEB and other shippers
towards a pipeline abandonment fund collection plan and set aside mechanism as per the Land Matters Consultation Initiative for
Pembina's rate regulated pipelines. Pembina's rate regulated pipelines account for less than 260 km, or three percent, of the total
infrastructure in Conventional Pipelines.

Reserve Replacement, Throughput and Product Demand

The Company's Conventional Pipeline tariff revenue is based
upon a variety of tolling arrangements, including ship-or-pay contracts, cost-of-service arrangements 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 the Company's crude oil and NGL pipelines and replacement of oil and gas reserves in the service areas will be dependent
upon the success of producers operating in those areas in exploiting their existing reserve bases and exploring for and developing
additional reserves. Without reserve additions, or expansion of the service areas, throughput on such pipelines will 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 the Company decreases as a result, cash flow available for dividends to shareholders and to service
obligations under the Convertible Debentures and the Company's other debt obligations could be adversely affected.

Over the long term, the Company'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. 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. 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 the Company's
control.

The volumes of natural gas processed through Pembina's gas
processing assets and of NGL and other products transported in the pipelines depend on production of natural gas in the areas serviced
by the business and 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, 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. 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.

28









|Pembina Pipeline Corporation | 
|---------------------------- | 

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 trunkline systems. Operational disruptions or apportionment on those third-party systems may prevent the full utilization
of the business.

Over the long-term, 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.

Completion and Timing of Expansion Projects

Many of Pembina's current growth projects are under development
by the Company and the successful completion of these facilities and expansions is dependent on a number of factors outside of
the Company's control, including availability of capital, receipt of regulatory approval and 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 the Company provide any assurance, that regulatory approval will
be received 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,
changes in shipper support over time, and changes to the legislative or regulatory framework could all impact on contractual and
regulatory milestones being accomplished. As a result, the cost estimates and completion dates for Pembina's major projects can
change at different stages of the project. Early stage projects face additional challenges including right-of-way procurement and
Aboriginal consultation requirements. Accordingly, actual costs can vary from initial estimates and these differences can be significant.
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 the Company bears the risk for
any cost overruns, and future agreements with customers entered into with respect to expansions may contain similar conditions.
While the Company is not currently aware of any undisclosed significant 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 the Company's expected return which, in turn, could reduce the level of cash available for dividends
to Shareholders.

Pembina's growth plans may strain its resources and may
be subject to high cost pressures in the North American energy sector. Pembina has a centralized and clearly defined governance
structure and process for all major projects with dedicated resources organized to lead and execute each major project. Pembina
will attempt to mitigate capital constraints and cost escalation risks through structuring of commercial agreements where shippers
retain complete or a share of capital cost excess. Pembina's emphasis on corporate social responsibility promotes generally positive
relationships with landowners, Aboriginal groups and governments which help to facilitate right-of-way acquisition, permitting
and scheduling. Detailed cost tracking and centralized purchasing is used on all major projects to facilitate optimum pricing and
service terms. Strategic relationships have been developed with suppliers and contractors. Compensation programs, communications
and the working environment are aligned to attract, develop and retain qualified personnel.

29









|Pembina Pipeline Corporation | 
|---------------------------- | 



Possible Failure to Realize Anticipated Benefits of Corporate
Strategy

Pembina evaluates the value proposition for expansion projects,
new acquisitions or divestitures on an ongoing basis. Planning and investment analysis is highly dependent on accurate forecasting
assumptions and to the extent that these assumptions do not materialize, financial performance may be lower or more volatile than
expected. Volatility in the economy, change in cost estimates, project scoping and risk assessment could result in a loss in profits
for the Company.

Additional Financing and Capital Resources

The timing and amount of Pembina's capital expenditures,
and the ability of Pembina to repay or refinance existing debt as it becomes due, directly affects the amount of cash dividends
that Pembina pays to shareholders. Future acquisitions, expansions of Pembina's pipeline systems and midstream operations, other
capital expenditures, including the capital expenditures that Pembina has committed to in respect of the Simonette pipeline expansion,
the Resthaven facility, the Saturn II facility, the Musreau II facility, and the RFS II project 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. 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 to
shareholders of Pembina may be reduced.

Debt Service

At the end of 2013, Pembina had exposure to floating interest
rates on $46 million in debt. This debt exposure is managed by using derivative financial instruments. A one percent change in
short-term interest rates would have an annualized impact of less than $1 million on net cash flows.

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

30









|Pembina Pipeline Corporation | 
|---------------------------- | 



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
to shareholders and payments to holders of convertible debentures.

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.

Selected
Quarterly Operating Information

|                                                         | 2013  | 2012  | 2011 
|-------------------------------------------------------- | ----- | ----- | -----
|                                                         | Q4    | Q3    | Q2   
|Average volume
        (mbpd unless stated otherwise)    |       |       |      
|Conventional Pipelines throughput                        | 500   | 489   | 484  
|Oil Sands & Heavy Oil contracted capacity, end of period | 880   | 880   | 870  
|Gas Services processing (mboe/d)(1)                      | 66    | 48    | 48   
|NGL sales volume                                         | 122   | 99    | 94   
|Total                                                    | 1,568 | 1,516 | 1,496

| | (1) | Net to Pembina. Converted to mboe/d from MMcf/d at a 6:1 ratio.
| | --- | ---------------------------------------------------------------

31







|Pembina Pipeline Corporation | 
|---------------------------- | 



Selected Quarterly
Financial Information

|                                                                                               | 2013  | 2012  | 2011 
|---------------------------------------------------------------------------------------------- | ----- | ----- | -----
|($ millions, except where noted)                                                               | Q4    | Q3    | Q2   
|Revenue                                                                                        | 1,301 | 1,300 | 1,175
|Operating expenses                                                                             | 101   | 87    | 91   
|Cost of goods sold, including product purchases                                                | 922   | 983   | 880  
|Realized (loss) gain on commodity-related derivative financial instruments                     | (3)   | (4)   | 4    
|Operating margin(1)                                                                            | 275   | 226   | 208  
|Depreciation and amortization included in operations                                           | 42    | 47    | 32   
|Unrealized gain (loss) on commodity-related derivative financial instruments                   | 2     | (2)   | 1    
|Gross profit                                                                                   | 235   | 177   | 177  
|Adjusted EBITDA(1)                                                                             | 235   | 201   | 185  
|Cash flow from operating activities                                                            | 194   | 88    | 140  
|Cash flow from operating activities per common share ($ per share)                             | 0.62  | 0.28  | 0.45 
|Adjusted cash flow from operating activities(1)                                                | 180   | 189   | 144  
|Adjusted cash flow from operating activities
        per common share(1)
        ($ per share) | 0.57  | 0.61  | 0.47 
|Earnings for the period                                                                        | 95    | 72    | 94   
|Basic and diluted earnings per common share ($ per share)                                      | 0.29  | 0.22  | 0.30 
|Common shares outstanding (millions):                                                          |       |       |      
|Weighted average (basic)                                                                       | 314   | 311   | 308  
|Weighted average (diluted)                                                                     | 315   | 312   | 309  
|End of period                                                                                  | 315   | 312   | 310  
|Common share dividends declared                                                                | 132   | 129   | 125  
|Common dividends per share
        ($ per share)                                               | 0.420 | 0.415 | 0.405
|Preferred share dividends                                                                      | 5     |       |      

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

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

| | • | Increased oil production 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 from producers in the WCBS (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 transported
on its pipelines and expansion of its fractionation capacity;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | New assets being placed into service;
| | - | -------------------------------------

| | • | Improved propane industry fundamentals in Canada and North America;
| | - | -------------------------------------------------------------------

| | • | The Acquisition, which closed on April 2, 2012; and
| | - | ---------------------------------------------------

| | • | Increased shares outstanding due to: the Acquisition; the DRIP; and the bought deal equity financing in the first quarter of
2013.
| | - | ----------------------------------------------------------------------------------------------------------------------------------



32











|Pembina Pipeline Corporation | 
|---------------------------- | 

Selected
Annual Financial Information

|($ millions, except where noted)                  | 2013  | 2012  | 2011 
|------------------------------------------------- | ----- | ----- | -----
|Revenue                                           | 5,025 | 3,427 | 1,676
|Earnings                                          | 351   | 225   | 166  
|Per common share - basic and diluted              | 1.12  | 0.87  | 0.99 
|Total assets                                      | 9,142 | 8,284 | 3,339
|Long-term financial liabilities(1)                | 2,454 | 3,005 | 1,753
|Declared dividends per common share ($ per share) | 1.65  | 1.61  | 1.56 

| | (1) | Includes loans and borrowings, convertible debentures, long-term derivative financial instruments, 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 at 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 performance of Pembina and its business. Since Non-GAAP
and Additional GAAP financial 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 financial 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 and 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 the Non-GAAP and Additional GAAP measures differently.

Investors should be cautioned that net revenue, EBITDA,
adjusted EBITDA, adjusted earnings, adjusted cash flow from operating activities, operating margin and total enterprise value should
not be construed as alternatives to net earnings, cash flow from operating activities or other measures of financial results determined
in accordance with GAAP as an indicator 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 including the Midstream business, aggregate revenue results of each of the
Company’s businesses and set comparable objectives.

|                   | 3 Months Ended
        December 31
        (unaudited) | 12 Months Ended
        December 31
|------------------ | ------------------------------------------------------ | -----------------------------------
|($ millions)       | 2013                                                   | 2012                               
|Total revenue      | 1,301                                                  | 1,265                              
|Cost of goods sold | 922                                                    | 968                                
|Net revenue        | 379                                                    | 297                                

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

EBITDA and adjusted EBITDA are Non-GAAP financial measures.
EBITDA is calculated as results from operating activities plus share of profit from equity accounted investees (before tax) 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. Adjusted EBITDA is EBITDA excluding acquisition-related expenses. Adjusted
EBITDA excludes items of a non-recurring basis that do not reflect normal operations.

Management believes that EBITDA and adjusted EBITDA provide
useful information to investors as they are an important indicator of the issuer's ability to generate liquidity through cash
flow from operating activities and assist investors and creditors in the calculation of ratios for assessing leverage and financial
performance. EBITDA and adjusted EBITDA are also used by investors and analysts for the purpose of valuing an issuer, including
financial and leverage ratios. Management utilizes EBITDA and adjusted EBITDA to set objectives and as key performance indicators
of the Company's success.

|                                                                                                                    | 3 Months Ended
        December 31
        (unaudited) | 12 Months Ended
        December 31
|------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------ | -----------------------------------
|($ millions, except per share amounts)                                                                              | 2013                                                   | 2012                               
|Results from operating activities                                                                                   | 191                                                    | 144                                
|Share of profit from equity accounted
        investees
        (before tax, depreciation and
        amortization) | 2                                                      | 2                                  
|Depreciation and amortization                                                                                       | 44                                                     | 50                                 
|Unrealized loss (gain) on commodity-related derivative financial instruments                                        | (2)                                                    | 2                                  
|EBITDA                                                                                                              | 235                                                    | 198                                
|Add:                                                                                                                |                                                        |                                    
|Acquisition-related expenses                                                                                        |                                                        | 1                                  
|Adjusted EBITDA                                                                                                     | 235                                                    | 199                                
|EBITDA per common share - basic (dollars)                                                                           | 0.75                                                   | 0.68                               
|Adjusted EBITDA per common share - basic (dollars)                                                                  | 0.75                                                   | 0.68                               

34









|Pembina Pipeline Corporation | 
|---------------------------- | 



Adjusted earnings

Adjusted earnings is a Non-GAAP financial measure which
is calculated as earnings before tax excluding unrealized gains or losses on derivative financial instruments and acquisition-related
expenses less preferred share dividends declared. Adjusted earnings excludes items of a non-recurring basis that do not reflect
normal operations and preferred dividends as they are not attributable to common shareholders. Management believes that adjusted
earnings provides useful information to investors by increasing the ability to predict and compare the financial performance of
consecutive reporting periods. Management utilizes adjusted earnings to assess the performance of the Company.

|                                                                            | 3 Months Ended
        December 31
        (unaudited) | 12 Months Ended
        December 31
|--------------------------------------------------------------------------- | ------------------------------------------------------ | -----------------------------------
|($ millions, except per share amounts)                                      | 2013                                                   | 2012                               
|Earnings before income tax                                                  | 136                                                    | 108                                
|Add (deduct):                                                               |                                                        |                                    
|Unrealized (gains) losses on fair value of derivative financial instruments | 28                                                     | 7                                  
|Preferred dividends declared                                                | (5)                                                    |                                    
|Acquisition-related expenses (recovery)                                     |                                                        | 1                                  
|Adjusted earnings                                                           | 159                                                    | 116                                
|Adjusted earnings per common share - basic(dollars)                         | 0.51                                                   | 0.40                               
|                                                                            |                                                        |                                    

Adjusted cash flow from operating activities

Adjusted cash flow from operating activities is a Non-GAAP
financial measure which is defined as cash flow from operating activities plus the change in non-cash working capital and excluding
preferred share dividends declared and acquisition-related expenses. Adjusted cash flow from operating activities excludes items
of a non-recurring basis that do not reflect normal operations and preferred dividends because they are not attributable to common
shareholders. Management believes that adjusted cash flow from operating activities provides comparable information to investors
for assessing financial performance 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.

|                                                                                | 3 Months Ended
        December 31
        (unaudited) | 12 Months Ended
        December 31
|------------------------------------------------------------------------------- | ------------------------------------------------------ | -----------------------------------
|($ millions, except per share amounts)                                          | 2013                                                   | 2012                               
|Cash flow from operating activities                                             | 194                                                    | 139                                
|Add (deduct):                                                                   |                                                        |                                    
|Change in non-cash working capital                                              | (9)                                                    | 32                                 
|Preferred dividends declared                                                    | (5)                                                    |                                    
|Acquisition-related expenses (recovery)                                         |                                                        | 1                                  
|Adjusted cash flow from operating activities                                    | 180                                                    | 172                                
|Cash flow from operating activities per common share (dollars)                  | 0.62                                                   | 0.48                               
|Adjusted cash flow from operating activities per common share - basic (dollars) | 0.57                                                   | 0.59                               

Operating margin

Operating margin is an Additional GAAP financial 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
financial performance of the Company’s operations. Management utilizes operating margin in setting objectives and a key performance
indicator of the Company’s success.

35









|Pembina Pipeline Corporation | 
|---------------------------- | 

Reconciliation of operating margin to gross profit:

|                                                                             | 3 Months Ended
        December 31
        (unaudited) | 12 Months Ended
        December 31
|---------------------------------------------------------------------------- | ------------------------------------------------------ | -----------------------------------
|($ millions)                                                                 | 2013                                                   | 2012                               
|Revenue                                                                      | 1,301                                                  | 1,265                              
|Cost of sales                                                                |                                                        |                                    
|Operations                                                                   | 101                                                    | 86                                 
|Cost of goods sold, including product purchases                              | 922                                                    | 968                                
|Realized (loss) gain on commodity-related derivative financial instruments   | (3)                                                    | 11                                 
|Operating margin                                                             | 275                                                    | 222                                
|Depreciation and amortization included in operations                         | 42                                                     | 48                                 
|Unrealized (loss) gain on commodity-related derivative financial instruments | 2                                                      | (2)                                
|Gross profit                                                                 | 235                                                    | 172                                

Total enterprise value

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

36









|Pembina Pipeline Corporation | 
|---------------------------- | 



Forward-Looking Statements & Information

In the interest of providing our securityholders and potential
investors with information regarding Pembina, including management's assessment of our future plans and operations, certain statements
contained in this MD&A constitute forward-looking statements or information (collectively, "forward-looking statements")
within the meaning of the "safe harbour" provisions of applicable securities legislation. Forward-looking statements
are typically identified by words such as "anticipate", "continue", "estimate", "expect",
"may", "will", "project", "should", "could", "believe", "plan",
"intend", "design", "target", "undertake", "view", "indicate", "maintain",
"projection", "explore", "entail", "schedule", "objective", "strategy",
"likely", "potential", "envision", "aim", "outlook", "propose", "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 and the
                                         tax treatment thereof;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | planning,
                                         construction, capital expenditure estimates, schedules, expected capacity, incremental
                                         volumes, in-service dates, rights, activities and operations with respect to new construction
                                         of, or expansions on existing, pipelines, gas services facilities, terminalling, storage
                                         and hub facilities and other facilities or energy infrastructure;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | • | Pembina's
                                         strategy and the development and expected timing of new business initiatives,  growth
                                         opportunities, and succession planning;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | • | expected
                                         future cash flows and future financing options;
| | - | -------------------------------------------------------------------------------------------------

| | • | tolls
                                         and tariffs and transportation, storage and services commitments and contracts;
| | - | ------------------------------------------------------------------------------------------------------------------------------

| | • | operating
                                         risks (including the amount of future liabilities related to pipeline spills and other
                                         environmental incidents) and related insurance coverage and inspection and integrity
                                         programs; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | expectations
                                         around increases to employee compensation and contributions to pension plans (including
                                         the impact of share price on annual share-based incentive expense).
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





37









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 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;
| | - | ----------------------------------------------------------------------------------------------------------

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

| | • | prevailing
                                         commodity prices 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;
| | - | ----------------------------------------------------------------

| | • | geotechnical
                                         and integrity costs;
| | - | --------------------------------------------------------------------------

| | • | in
                                         respect of current developments, expansions, planned capital expenditures, completion
                                         dates and capacity expectations: that third parties will provide any necessary support;
                                         that any thirdparty 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 the stability of Pembina's dividends: 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; and
| | - | --------------------------------------------------------------------

| | • | prevailing
                                         regulatory, tax and environmental laws and regulations.
| | - | -----------------------------------------------------------------------------------------------------------

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;
| | - | ----------------------------------------------------------------------------------

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

| | • | labour
                                         and material shortages;
| | - | -----------------------------------------------------------------------

| | • | reliance
                                         on key relationships and agreements;
| | - | --------------------------------------------------------------------------------------

| | • | 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 affiliates
                                         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 in interest rates, foreign currency exchange rates and commodity prices; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | • | the
                                         other factors discussed under "Risk Factors" in Pembina's AIF for the year
                                         ended December 31, 2013. 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.



38