Exhibit 99.2











Pembina
Pipeline Corporation



MANAGEMENT'S DISCUSSION
AND ANALYSIS

The following management's
discussion and analysis ("MD&A") of the financial and operating results of Pembina Pipeline Corporation ("Pembina"
or the "Company") is dated February 26, 2015 and is supplementary to, and should be read in conjunction with, Pembina's
audited consolidated annual financial statements for the years ended December 31, 2014 and 2013 ("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"). This report also refers to net revenue,
operating margin, earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted cash flow from
operating activities (and cash flow from operating activities per common share and adjusted cash flow from operating activities
per common share), and total enterprise value, which are financial measures that are not defined by Generally Accepted Accounting
Principles ("GAAP"). Pembina's methods of calculating these financial measures may not be directly comparable to that
of other companies. Pembina considers these non-GAAP financial measures to provide useful information to both management and investors
in measuring Pembina's financial performance and financial condition. For more information about the measures which are not defined
by GAAP, including reconciliation to the most directly comparable GAAP measure, see "Non-GAAP and Additional GAAP Measures."

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

|Measurement | Other                                              |     
|----------- | -------------------------------------------------- | ----
|bpd         | barrels per day                                    | B.C.
|mbpd        | thousands of barrels per day                       | DRIP
|mmbbls      | millions
    of barrels                            | IFRS
|mboe/d      | thousands
    of barrels of oil equivalent per day | NGL 
|MMcf/d      | millions
    of cubic feet per day                 | U.S.
|bcf/d       | billions
    of cubic feet per day                 | WCSB
|km          | kilometre                                          |     

About
Pembina

Calgary-based Pembina
Pipeline Corporation is a leading transportation and midstream service provider that has been serving North America's energy industry
for over 60 years. Pembina owns and operates an integrated system of pipelines that transport various hydrocarbon liquids including
conventional and synthetic crude oil, heavy oil and oil sands products, condensate (diluent) and NGL produced in western Canada
and ethane produced in North Dakota. The Company also owns and operates gas gathering and processing facilities and an oil and
NGL infrastructure and logistics business. With facilities strategically located in western Canada and in NGL 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.

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

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

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

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

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

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









Pembina Pipeline Corporation





Financial & Operating Overview

|                                                                                   |  | 3 Months Ended
 December
    31(unaudited) |       | 12 Months Ended
 December 31
|---------------------------------------------------------------------------------- |  | ------------------------------------------ | ----- | ----------------------------
|($ millions, except where noted)                                                   |  | 2014                                       |       |                             
|Conventional Pipelines throughput (mbpd)                                           |  |                                            | 612   |                             
|Oil Sands & Heavy Oil contracted capacity (mbpd)                                   |  |                                            | 880   |                             
|Gas Services average volume processed (mboe/d)net to Pembina(1)                    |  |                                            | 97    |                             
|Midstream NGL sales volume (mbpd)                                                  |  |                                            | 130   |                             
|Total volume (mbpd)                                                                |  |                                            | 1,719 |                             
|Revenue                                                                            |  |                                            | 1,259 |                             
|Net revenue(2)                                                                     |  |                                            | 304   |                             
|Operating expenses                                                                 |  |                                            | 117   |                             
|Realized gain (loss) on commodity-related derivative financial instruments         |  |                                            | 8     |                             
|Operating margin(2)                                                                |  |                                            | 195   |                             
|Depreciation and amortization included in operations                               |  |                                            | 62    |                             
|Unrealized gain (loss) on commodity-related derivative financial instruments       |  |                                            | 11    |                             
|Gross profit                                                                       |  |                                            | 144   |                             
|General and administrative expenses                                                |  |                                            | 28    |                             
|Other expenses                                                                     |  |                                            | 2     |                             
|Net finance costs (income)                                                         |  |                                            | (9    | )                           
|Share of loss of investment in equity accounted investees, net of tax              |  |                                            |       |                             
|Current tax expense                                                                |  |                                            | 28    |                             
|Deferred tax expense                                                               |  |                                            | 11    |                             
|Earnings                                                                           |  |                                            | 84    |                             
|Earnings per common share – basic (dollars)                                        |  |                                            | 0.22  |                             
|Earnings per common share – diluted (dollars)                                      |  |                                            | 0.22  |                             
|EBITDA(2)                                                                          |  |                                            | 170   |                             
|Cash flow from operating activities                                                |  |                                            | 196   |                             
|Cash flow from operating activities per common share – basic (dollars)(2)          |  |                                            | 0.58  |                             
|Adjusted cash flow from operating activities(2)                                    |  |                                            | 164   |                             
|Adjusted cash flow from operating activities per common share – basic (dollars)(2) |  |                                            | 0.49  |                             
|Common share dividends declared                                                    |  |                                            | 146   |                             
|Dividends per common share (dollars)                                               |  |                                            | 0.44  |                             
|Preferred share dividends declared                                                 |  |                                            | 10    |                             
|Capital expenditures                                                               |  |                                            | 483   |                             
|Total enterprise value ($ billions)(2)                                             |  |                                            | 18    |                             

| | (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."
| | --- | -------------------------------------------------

Revenue in 2014 was $6.1 billion compared to $5 billion
in 2013 while net revenue for 2014 was $1.5 billion compared to $1.3 billion during 2013. The increase in net revenue was largely
due to the Company's Conventional Pipelines and Gas Services businesses which generated increases in net revenue of almost 25 percent
and 36 percent, respectively, during 2014 compared to the prior year. Strong performance in each of these businesses was driven
by new assets and facilities being placed into service as well as increased volumes on legacy assets.

Revenue for the fourth quarter of 2014 was $1.3 billion,
essentially unchanged from the fourth quarter of 2013. Net revenue decreased by 20 percent in the fourth quarter of 2014 to
$304 million from $379 million during the same period of 2013. This decrease was primarily due to the decline in commodity
prices, which resulted in lower price differentials and an inventory write-down of $38 million in the Company's
Midstream business. Partially offsetting net revenue was the Company's Conventional Pipelines business, which generated an
increase of approximately 32 percent in net revenue in the fourth quarter of 2014 compared to the same period of 2013 due to
contributions from the Phase I crude oil, condensate and natural gas liquids pipeline capacity expansions which were
completed in December 2013 (the "Phase I Expansions"). In addition, start-up at the new Resthaven Facility and
strong performance at the Company's Saturn I Facility helped drive an increase of over 39 percent in Gas Services' net
revenue in the fourth quarter of 2014 compared to the same period of 2013.



2







Pembina Pipeline Corporation





Operating expenses were $401 million for the full-year
in 2014 and $117 million during the fourth quarter compared to $356 million and $101 million during the same periods of 2013. The
increase in operating expenses for the year and fourth quarter ended December 31, 2014 was primarily the result of new in-service
assets, offset by a reduction in operating expenses in the Company's Midstream business resulting from Pembina's disposition of
certain of its non-core trucking-related assets recognized in the second quarter of 2014.

During 2014, operating margin increased almost 14 percent
to $1.1 billion compared to $949 million for the full-year of 2013. The year-over-year increase was primarily because of strong
performance in the Company's Conventional Pipelines and Gas Services businesses, as well as the Midstream business in the first
nine months of the year. Operating margin totalled $195 million during the fourth quarter of 2014, down from $275 million in the
same period last year. This decrease was largely related to the Midstream business, which was impacted by weak commodity prices
during the last several months of 2014, as discussed above.

Depreciation and amortization included in operations during
2014 was $216 million compared to $163 million for the full-year of 2013. This increase was partially due to depreciation and amortization
of $40 million stemming from the growth in Pembina's asset base since 2013. This includes the acquisition of the Vantage pipeline
system (the "Vantage Pipeline") which increased the Company's asset base by seven percent and contributed $4 million
in depreciation expense since the closing of the acquisition (discussed below). In addition, Pembina recognized $13 million in
accelerated depreciation associated with the Company's non-core trucking-related assets in the second quarter of 2014, as well
as a reduced recovery recognized in 2014 compared to 2013 with respect to the re-measurement of the decommissioning provision due
to changes in discount rates. In the fourth quarter of 2014, depreciation and amortization included in operations rose to $62 million
compared to $42 million during the same period in 2013 as a result of the same factors which impacted the full-year results noted
above.

Gross profit for 2014 was $876 million compared to $793
million for 2013. This 10 percent year-over-year increase was driven by strong operating performance in 2014 as previously mentioned.
In the fourth quarter of 2014, decreased operating margin coupled with increased depreciation and amortization included in operations
contributed to gross profit of $144 million, a 39 percent reduction compared to $235 million in the same period in 2013.

For the year ended December 31, 2014, Pembina incurred
general and administrative expenses (excluding corporate depreciation and amortization) of $156 million compared to $132 million
during 2013. The increase was largely due to higher salaries, benefits, incentives and rental expenses related to the addition
of new employees and consultants to support Pembina's growth. General and administrative expenses (excluding corporate depreciation
and amortization) were $28 million in the fourth quarter of 2014 compared to $43 million in the same period of 2013. This decrease
was primarily due to lower share-based payment expenses which were partially offset by an increase in salaries, benefits and rental
expenses. The decrease in share-based payment expense in the fourth quarter of 2014 is correlated with the Company's share price,
which decreased during that period compared to an increase in the Company's share price in the fourth quarter of 2013. Every $1
change in share price is expected to change Pembina's annual share-based incentive expense by approximately $1 million.



3







Pembina
Pipeline Corporation



Pembina generated EBITDA of $920 million in 2014 ($976
million prior to an inventory write-down and other expenses, as discussed below), 11 percent higher than EBITDA of $832 million
in 2013. The increase in EBITDA was due to higher operating margin, partially offset by an inventory write-down of $38 million
(2013: nil) in the Company's Midstream business recorded in the fourth quarter of the year and other expenses of $18 million (2013:
$1 million). Other expenses increased year-over-year primarily due to a net impairment for non-recoverable costs associated with
the Cornerstone pipeline project (which did not proceed), arbitration settlement costs and acquisition-related expenses for the
Vantage Pipeline. EBITDA was $170 million during the fourth quarter of 2014, down from $235 million during the fourth quarter of
2013 due to decreased operating margin, which was partially offset by reduced general and administrative and other expenses. EBITDA
for the fourth quarter of 2014 before the $38 million inventory write-down was $208 million.

Full-year net finance costs in 2014 totalled $130 million,
down from $166 million in 2013. Net finance costs were lower in 2014 primarily due to a $30 million decrease in the loss on the
revaluation of the conversion feature of the series E and F convertible debentures resulting from fewer debentures outstanding
and lower prices for these securities. A $9 million decrease in interest expense on the convertible debentures as a result of conversions
during the year and foreign exchange gains and other of $3 million also contributed to lower net finance costs. These changes were
partially offset by an increase of $8 million in the loss on fair value of non-commodity-related derivative financial instruments
and increased interest expense of $2 million on loans and borrowings, reflecting increased borrowing levels, net of capitalized
borrowing costs.

Income tax expense for 2014 totalled $167 million, including
current tax of $103 million and deferred tax of $64 million, compared to income tax expense of $143 million in 2013, including
current tax of $38 million and deferred tax of $105 million. The current tax rose in 2014 primarily as a result of taxable income
exceeding losses and deductions available for carry-over in certain of Pembina subsidiary corporations. Income tax expense was
$39 million for the fourth quarter of 2014, including current tax of $28 million and deferred tax of $11 million, compared to $41
million, including current tax of $19 million and deferred tax of $22 million in the same period of 2013 for the same reasons noted
above.

The Company's earnings increased to $383 million in
2014 compared to $351 million in 2013. This was largely due to higher gross profit in the Conventional Pipelines, Gas Services
and Midstream businesses and lower finance costs, which were offset by increased general and administrative expenses, other expenses,
share of loss from equity accounted investees and income tax expense. Despite increased earnings, earnings per share decreased
from $1.12 per common share in 2013 to $1.07 per common share in 2014, largely because of the increased weighted average number
of common shares outstanding due to shares issued in the following ways: upon conversion of convertible debentures; under the dividend
reinvestment component of Pembina's Premium DividendTM and Dividend Reinvestment Plan; and in association with the Vantage
Pipeline acquisition. Also offsetting the increase in earnings was the Company's share of loss from equity accounted investees,
which included accelerated depreciation of $25 million for certain out-of-service assets at Pembina's Fort Saskatchewan ethylene
storage facility which was recorded in the third quarter of 2014. The Company's earnings decreased to $84 million ($0.22 per common
share) during the fourth quarter of 2014 compared to $95 million ($0.29 per common share) during the fourth quarter of 2013 largely
due to reduced gross profit in the Company's Midstream business, higher taxes and depreciation and amortization included in operations
in 2014.

Cash flow from operating activities
for the year ended December 31, 2014 was $800 million ($2.45 per common share) compared to $685 million ($2.23 per common share)
during 2013. The increase was mainly due to higher earnings as well as a decreased change in non-cash working capital in 2014 compared
to 2013 and partially offset by increased taxes paid. Cash flow from operating activities was $196 million ($0.58 per common share)
during the fourth quarter of 2014 compared to $208 million ($0.66 per common share) for the same period last year, with the decrease
primarily due to lower fourth quarter earnings in 2014.



4







Pembina
Pipeline Corporation



Adjusted cash flow from operating activities in 2014
was $777 million ($2.38 per common share) compared to $725 million ($2.36 per common share) during 2013. The increase was largely
related to higher operating margin offset by increased current taxes, share-based payment expenses and preferred share dividends
declared and paid. Adjusted cash flow from operating activities for the fourth quarter of 2014 was $164 million ($0.49 per common
share) compared to $185 million ($0.59 per common share) during the fourth quarter of 2013. This decrease was primarily due to
lower operating margin, increased current taxes and preferred share dividends declared and paid.

Operating Results

|                       |  | 3
    Months EndedDecember 31(unaudited) |     |                     | 12
    Months Ended December 31 |               
|---------------------- |  | ---------------------------------------- | --- | ------------------- | ------------------------------- | --------------
|                       |  | 2014                                     |     | 2013                |                                 | 2014          
|($ millions)           |  | Net Revenue(1)                           |     | Operating Margin(1) |                                 | Net Revenue(1)
|Conventional Pipelines |  |                                          | 146 |                     |                                 |               
|Oil Sands & Heavy Oil  |  |                                          | 52  |                     |                                 |               
|Gas Services           |  |                                          | 46  |                     |                                 |               
|Midstream              |  |                                          | 61  |                     |                                 |               
|Corporate              |  |                                          | (1  | )                   |                                 |               
|Total                  |  |                                          | 304 |                     |                                 |               

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

Conventional Pipelines

|                                                                             |  | 3
    Months Ended
    December 31 (unaudited) |     |   | 12 Months Ended
December 31 | 
|---------------------------------------------------------------------------- |  | ---------------------------------------------- | --- | - | --------------------------- | 
|($ millions, except where noted)                                             |  | 2014                                           |     |   | 2013                        | 
|Average throughput (mbpd)                                                    |  |                                                | 612 |   |                             | 
|Revenue                                                                      |  |                                                | 146 |   |                             | 
|Operating expenses                                                           |  |                                                | 72  |   |                             | 
|Realized gain on commodity-related derivative financial instruments          |  |                                                |     |   |                             | 
|Operating margin(1)                                                          |  |                                                | 74  |   |                             | 
|Depreciation and amortization included in operations                         |  |                                                | 17  |   |                             | 
|Unrealized (loss) gain on commodity-related derivative financial instruments |  |                                                | (2  | ) |                             | 
|Gross profit                                                                 |  |                                                | 55  |   |                             | 
|Capital expenditures                                                         |  |                                                | 232 |   |                             | 

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

Business Overview

Pembina's Conventional Pipelines business comprises a well-maintained
and strategically located 8,800 km pipeline network that transports hydrocarbon products and extends across much of Alberta and
parts of B.C. In addition, the recently acquired Vantage Pipeline transports specification ethane from gas plants in North Dakota
and Saskatchewan to Empress, Alberta, where it is delivered onto a third-party pipeline. The primary objectives of this business
are to provide safe, responsible 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.



5







Pembina
Pipeline Corporation



Operational Performance

Conventional Pipelines' throughput averaged 575 mbpd for
2014, up 17 percent compared to 492 mbpd for 2013. During the fourth quarter of 2014, throughput averaged a record 612 mbpd. This
represents an increase of approximately 22 percent compared to the same period of 2013, when average throughput was 500 mbpd.

These increases were primarily due to Pembina's Phase
I Expansions, which were placed into service in December 2013 and which allowed for the receipt of higher volumes at Pembina's
existing connections and truck terminals. As a result of the expansions, volumes on Pembina's Peace Pipeline increased almost 69
mbpd or 32 percent over 2014 as compared to 2013. The Company also placed several new connections into service during 2014, which
further contributed to increased throughput on its systems. In addition, during the fourth quarter of 2014, Pembina began transporting
volumes on the Vantage Pipeline. As a result of these factors, in December of 2014, Pembina reached a record average monthly volume
performance of 631 mbpd.

Financial Performance

Conventional Pipelines'revenue in 2014 was $513 million, 25 percent higher compared to $411 million for 2013. During
the fourth quarter of 2014, revenue was $146 million, almost 32 percent higher than the $111 million generated in the same quarter
of the previous year. The increases during the 2014 periods were primarily due to the Phase I Expansions noted above, strong volumes
from existing and new connections, including Pembina's Saturn I and Resthaven facilities and selective toll increases implemented
in 2014. The addition of the Vantage Pipeline also had a positive impact on revenue during the fourth quarter.

Operating expenses were $211 million for 2014 compared
to $162 million in 2013 and $72 million in the fourth quarter of 2014 compared to $52 million in the same period of the prior year.
On a full-year basis, higher operating expenses in 2014 were largely driven by increases in repairs and maintenance, integrity
costs, labour, property taxes as well as increased insurance costs related to additional in-service assets. The increase in the
fourth quarter of 2014 was partially due to maintenance costs incurred on the Company's Peace and Western systems which were incremental
to Pembina's ongoing pipeline maintenance and integrity management program. Further contributing to the increase in operating expenses
in the fourth quarter of 2014, as compared to the same period in 2013, were increased labour costs due to additional staff and
vehicle units within the Conventional Pipelines business.

As a result of higher revenue, which was partially offset
by an increase in operating expenses, operating margin was $302 million for the full-year of 2014 and $74 million for the fourth
quarter, 20 percent and 25 percent higher, respectively, than the $251 million and $59 million recorded for the commensurate periods
of 2013.

Depreciation and amortization included in operations for
the year ended December 31, 2014 was $42 million compared to $12 million for 2013. During the fourth quarter of 2014, depreciation
and amortization included in operations was $17 million compared to $7 million during the same period of the prior year. The increase
for the full-year and fourth quarter of 2014 resulted from additional in-service assets associated with the Phase I Expansions
and the Vantage Pipeline, as well as a reduction in the recovery recognized in 2014 compared to 2013 with respect to the re-measurement
of the decommissioning provision due to changes in discount rates.



6







Pembina
Pipeline Corporation



Gross profit was $260 million and $55 million for the year and
three months ended December 31, 2014, respectively, compared to $240 million and $51 million during the same periods of 2013. These
increases were due to higher operating margin, which was partially offset by increased depreciation and amortization included in
operations, as discussed above.

Capital expenditures totalled $628 million and $232 million
for the full-year and fourth quarter of 2014, respectively, compared to $325 million and $126 million for the same periods of 2013.
The majority of the spending in 2014 related to Pembina's pipeline expansion projects which are described throughout this document.

New Developments

As announced in September 2014, Pembina is increasing
the size of its Phase III Pipeline Expansion program (the "Phase III Expansion") due to strong customer demand throughout
the year. Pembina now plans to construct two pipelines between Fox Creek and Namao, Alberta (one 16-inch diameter and one 24-inch
diameter) with an initial combined capacity of 420 mbpd and an ultimate capacity of over 690 mbpd with the addition of midpoint
pump stations. Another segment was also added to the project between Wapiti and Kakwa, Alberta. These additions are expected to
increase capital spending for the mainline project from $2 billion to $2.44 billion. Subject to regulatory and environmental approvals,
Pembina expects the 16-inch and 24-inch diameter pipelines to be in-service between late-2016 and mid-2017. Pembina submitted its
regulatory application for both pipelines from Fox Creek to Namao on September 2, 2014.

The Phase III Expansion continued to receive positive
customer support through the latter part of 2014, with new contracts being signed for volumes. Pembina announced on September 10,
2014 that it had commitments for 289 mbpd and by September 25, 2014, the Company announced that it had secured additional agreements,
bringing total volume under contract to 307 mbpd. Since then, Pembina has received further commitments for an additional 55 mbpd,
despite challenging markets near the end of the year. Total committed volume is now 362 mbpd, or 86 percent of the initial 420
mbpd capacity.

Pembina placed its previously announced pipeline expansion
between Simonette and Fox Creek into service on August 6, 2014. With this expansion, Pembina expects to be able to deliver an initial
40 mbpd into its Peace Pipeline from Fox Creek into Edmonton once the crude oil and condensate Phase II Expansion, discussed below,
is complete. The 35 km segment from Lator to Simonette is also complete and came into service in January 2015 and construction
is progressing on the 35 km segment from Kakwa to Lator, with an anticipated April 2015 in-service date. To date, over 10 percent
of the overall Phase III Expansion program has been completed on time and on budget.

Also during 2014, Pembina was successful in its commercial
efforts to secure the majority of its existing crude and condensate volumes under long-term, firm-service contracts. In aggregate,
Pembina has now contracted 690 mbpd of crude oil, condensate and NGL through its recontracting efforts and through its Phase I,
II and III conventional pipeline expansions. Once the Phase III Expansion is brought into service, virtually all of the throughput
on Pembina's Peace and Northern systems will be under long-term, fee-for-service contracts.

With the completion of the Phase III Expansion, the Company
will have four pipelines in the corridor between Fox Creek and Namao which will allow for operational efficiencies and improved
quality management of product on its systems.

Work continued on the Phase II crude oil, condensate and
NGL expansions ("Phase II Expansions") over the fourth quarter of 2014. Pembina expects the crude oil and condensate
portion of the project to be mechanically complete in April 2015 and commissioned in the second quarter of 2015. Pembina has now
received all regulatory and environmental approvals for the NGL portion of the pipeline and expects this component of the project
to be in-service in the third quarter of 2015. Overall, the Phase II Expansions are continuing to track on budget.



7







Pembina
Pipeline Corporation



The Company is also continuing
to progress its previously announced plans to expand its presence in the Edson and Willesden Green areas of Alberta. Pembina expects
the Willesden Green pipeline lateral to be in-service in mid-2015 and,subject to
regulatory and environmental approvals, its pipeline laterals in the Edson area to be in-service mid-2016.

On November 11, 2014, Pembina announced that it has entered
into binding agreements to proceed with a $220 million expansion to its pipeline infrastructure in northeast British Columbia ("B.C.")
(the "NEBC Expansion"). The NEBC Expansion will transport condensate and NGL for various producers in the liquids-rich
Montney resource play.

The project entails the construction of approximately
160 km of up to 12-inch diameter pipeline with a base capacity of up to 75 mbpd that will parallel the Company's Blueberry pipeline
system northwest of Taylor, B.C. to the Highway/Blair Creek area of B.C. The project is underpinned by a long-term, cost-of-service
agreement with an anchor tenant. Subject to regulatory and environmental approvals, Pembina anticipates bringing the NEBC Expansion
on-stream in late-2017.

Subsequent to the acquisition of the Vantage pipeline
(see "Acquisition of Vantage Pipeline") and year end, on February 10, 2015, the Company announced that it has entered
into agreements to expand the Vantage pipeline system (the "Vantage Expansion") for an estimated capital cost of $85
million.

The Vantage Expansion entails increasing the Vantage Pipeline's
mainline capacity from 40 mbpd to 68 mbpd through the addition of mainline pump stations and the construction of a new 80 km, 8-inch
gathering lateral. The Vantage Expansion is supported by a long-term, fee-for-service agreement, with a substantial take-or-pay
component, and the gathering lateral is underpinned by a fixed return on invested capital agreement. Subject toregulatory
and environmental approvals, the Vantage Expansion is expected to be in-service in early-2016.

Oil Sands & Heavy Oil

|                                                     | 3 Months Ended
        December 31
        (unaudited) | 12 Months Ended
        December 31
|---------------------------------------------------- | ------------------------------------------------------ | -----------------------------------
|($ millions, except where noted)                     | 2014                                                   | 2013                               
|Contracted capacity (mbpd)                           | 880                                                    | 880                                
|Revenue                                              | 52                                                     | 53                                 
|Operating expenses                                   | 18                                                     | 19                                 
|Operating margin(1)                                  | 34                                                     | 34                                 
|Depreciation and amortization included in operations | 4                                                      | 2                                  
|Gross profit                                         | 30                                                     | 32                                 
|Capital expenditures                                 | 6                                                      | 5                                  

| | (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 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.



8







Pembina
Pipeline Corporation



Financial Performance

In 2014, Oil Sands & Heavy Oil revenue was $204 million,
an increase from 2013 revenue of $195 million, largely due to higher interruptible volumes on the Nipisi Pipeline and revenue generated
by the Nipisi to Trans Mountain Pipeline connection. Higher operating expenses related to scheduled integrity work in the first
three quarters of 2014, which were recovered under Pembina's contractual arrangements with its customers, also contributed to the
increase in revenue. For the fourth quarter of 2014, revenue was $52 million, essentially unchanged
compared to the fourth quarter of last year.

Operating expenses were $68 million for the year ended
December 31, 2014, compared to $64 million for 2013. Increased costsrelated to scheduled
integrity work and maintenance were the main contributors to the incremental operating expenses.
Operating expenses were $18 million during the fourth quarter of 2014 compared to $19 million for the same period of the prior
year.

Operating margin was $136 million and $34 million for
the year and three months ended December 31, 2014 compared to $131 million and $34 million, respectively, generated during the
same periods of 2013. The 2014 full-year increase was primarily due to greater interruptible volumes on the Nipisi Pipeline and
the incremental revenue from the Nipisi to Trans Mountain Pipeline connection as discussed above.

Depreciation and amortization included in operations during
the year and fourth quarter ended December 31, 2014 was $17 million and $4 million, compared to $17 million and $2 million, respectively
in the commensurate periods of the prior year. The quarterly increase was due to an increase in the useful life on the Nipisi and
Mitsue systems during the fourth quarter of 2013.

Gross profit was $119 million and $30 million for the
twelve and three months ended December 31, 2014, respectively, compared to $114 million and $32 million during the same periods
of 2013. Gross profit increased in 2014 due to the same factors that resulted in higher operating margin. Gross profit decreased
slightly during the fourth quarter of 2014 compared to the same quarter of the prior year due to increased depreciation and amortization
included in operations, as discussed above.

Full-year capital expenditures
within the Oil Sands & Heavy Oil business totalled $41 million in 2014, primarily relating to the Cornerstone pipeline project
and pipeline connections.On September 25, 2014, Pembina was informed that Statoil's Cornerstone oil sands project had been
deferred for an indeterminate period of time. The engineering support agreement between Pembina and Statoil for the related Cornerstone
oil sands pipeline expired, and no additional capital will be spent on the pipeline project. Pembina will retain the right to use
the engineering for other commercial discussions and recognized a net impairment of non-recoverable costs of $6 million related
to the Cornerstone pipeline project. Of the total expenditures on the Cornerstone project, $25
million has been recovered. The capital expenditures in 2013 totalled $38 million, which primarily related to the construction
of additional pump stations on the Nipisi and Mitsue pipelines.



9









Pembina
Pipeline Corporation



Gas Services

|                                                     | 3 Months Ended
        December 31
        (unaudited) | 12 Months Ended
        December 31
|---------------------------------------------------- | ------------------------------------------------------ | -----------------------------------
|($ millions, except where noted)                     | 2014                                                   | 2013                               
|Average volume processed (MMcf/d) net to Pembina(1)  | 584                                                    | 397                                
|Average volume processed (mboe/d)(2) net to Pembina  | 97                                                     | 66                                 
|Revenue                                              | 46                                                     | 33                                 
|Operating expenses                                   | 17                                                     | 12                                 
|Operating margin(3)                                  | 29                                                     | 21                                 
|Depreciation and amortization included in operations | 7                                                      | 7                                  
|Gross profit                                         | 22                                                     | 14                                 
|Capital expenditures                                 | 79                                                     | 56                                 

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

| | (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 this business' facilities
are transported on Pembina's Conventional Pipelines. Operating assets within Gas Services include:

| | · | Pembina's Cutbank Complex – located near Grand Prairie, Alberta,
this facility includes four shallow cut sweet gas processing plants (the Cutbank Gas Plant, the Musreau Gas Plant, the Musreau
II Facility and the Kakwa Gas Plant) and one deep cut gas processing plant (the Musreau Deep Cut Facility). In total, the Cutbank
Complex has 525 MMcf/d of processing capacity (468 MMcf/d net to Pembina) and 205 MMcf/d of ethane-plus extraction capacity (net
to Pembina). The Cutbank Complex 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.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Pembina's Resthaven Facility – located near Resthaven, Alberta,
this facility includes 200 MMcf/d (134 MMcf/d net to Pembina) of extraction capacity.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------

These facilities 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 and Saskatchewan, as discussed in more detail below.

Operational Performance

Within Pembina's Gas Services business, on a full-year
basis, volumes increased more than 61 percent to 515 MMcf/d compared to 319 MMcf/d in 2013. Higher volumes during 2014 were primarily
related to the addition of the Saturn I Facility, which was placed into service in late October 2013 and which operated above its
nameplate capacity of 200 MMcf/d during a large portion of 2014. Improved operational performance at the Cutbank Complex also contributed
to the growth in volumes. Overall, during 2014, Pembina continued to benefit from producer activity in the areas surrounding its
assets that is focused on liquids-rich natural gas.



10







Pembina
Pipeline Corporation



Average volume processed, net to Pembina, was 584 MMcf/d
during the fourth quarter of 2014, approximately 47 percent higher than the 397 MMcf/d processed during the fourth quarter of the
previous year. Increased volumes were related to a full quarter's contribution from the Saturn I Facility, as well as volumes from
the Resthaven Facility, which was placed into service on October 6, 2014 and the Musreau II Facility, which was placed into service
on December 17, 2014.

Financial Performance

Gas Services generated revenue of $165 million in 2014
compared to $121 million in 2013. During the fourth quarter of 2014, $46 million in revenue was generated, up from $33 million
in the same period of the prior year. These 36 and 39 percent increases, respectively, primarily reflect the new facilities that
were placed into service in this business, as discussed above.

Full-year operating expenses
totalled $58 million, up from $43 million during the prior year. For the fourth quarter of 2014, Gas Services incurred operating
expenses of $17 million compared to $12 million during the fourth quarter of 2013. The full-year and quarterly increases during
2014 were mainly due to additional operating costs associated with the new Saturn I Facility, as well as the Resthaven Facility
and Musreau II Facility being placed into service later in the year, and higher operating costs related to the increase in volumes
processed at the Cutbank Complex. Pembina also conducted turnarounds at its Cutbank and Musreau gas plants and expensed associated
costs during the second and third quarters of 2014, respectively. Expenditures associated with these turnarounds arerecovered
under Pembina's contractual arrangements with its customers; however, processing revenue and service fees are not earned during
outages.

Gas Services realized operating margin of $107 million
in 2014 and $29 million in the fourth quarter of 2014 compared to $78 million and $21 million during the same periods of the previous
year. On a full-year basis, operating margin increased primarily as a result of strong operating performance and the addition of
new assets since the prior period. Increased volumes and revenue during the three months ended December 31, 2014 resulted in improved
operating margin over the fourth quarter.

Depreciation and amortization included in operations for
the full-year of 2014 totalled $22 million compared to $20 million in 2013, with the increase primarily attributable to the addition
of new assets as discussed above. For the fourth quarter of 2014, depreciation and amortization included in operations totalled
$7 million, unchanged from the same period of the prior year.

On a full-year basis, gross profit was $85 million in
2014 compared to $58 million during 2013.For the three months ended December 31, 2014, gross profit
was $22 million compared to $14 million in the same period of 2013. These increases reflect higher operating margin during the
2014 periods compared to the same periods of 2013, primarily resulting from new assets being placed into service.

For the year ended December 31, 2014, capital expenditures
within Gas Services totalled $295 million compared to $258 million during 2013. Capital spending in 2014 was largely to progress
the multi-year construction projects at Resthaven, Saturn II, and Musreau II, which are discussed below. In 2013, capital expenditures
were primarily related to the Saturn I Facility, Saturn II, Musreau II and Resthaven.

New Developments

The Company continued to attract significant support for
new gas gathering and processing infrastructure throughout 2014 and successfully progressed its roster of projects within this
business.



11







Pembina
Pipeline Corporation



On October 6, 2014, Pembina placed its 200 MMcf/d (134
MMcf/d net) Resthaven Facility into service and it is now delivering NGL into Pembina's Peace Pipeline.

On October 10, 2014, Pembina announced that it plans to
proceed with a $170 million (gross) 100 MMcf/d expansion of the Resthaven Facility and to build, own and operate a new gas gathering
pipeline that will deliver gas into the plant (collectively, the "Resthaven Expansion"). The Resthaven Expansion is underpinned
by a long-term fee-for-service agreement and Pembina expects the plant expansion to be in-service in mid-2016 and the gathering
pipeline to be in-service in mid-2015.

On November 27, 2014,
Pembinaannounced that it plans to construct a new 100 MMcf/d shallow cut facility ("Musreau III") and further
expand its gas processing capacity at Musreau for an estimated cost of $105 million. Musreau III,
which is underpinned by long-term agreements with several area producers, will be built adjacent to Pembina's existing Musreau
I and Musreau II facilities.The new gas plant will leverage the engineering, design and execution strategy from the Company's
Musreau I and Musreau II facilities and will use the same pipeline lateral to access Pembina's Peace Pipeline System. Pembina
expects Musreau III to have liquids extraction capacity of 3 mbpd, subject to gas compositions. The agreements for Musreau III
are take-or-pay in nature and provide flow through of operating expenses. Subject to regulatory and environmental approvals, Pembina
anticipates bringing Musreau III on-stream in mid-2016.

In total, once Musreau III is complete, the Cutbank Complex
will have 568 MMcf/d of shallow cut processing capacity, net to Pembina, 205 MMcf/d of deep cut processing capacity and will be
able to produce roughly 25 mbpd of liquids for transportation on Pembina's Conventional Pipelines.

Pembina has also completed commissioning of its newly
constructed 100 MMcf/d shallow cut gas plant, the Musreau II Facility, which came in slightly under budget and was placed into
service on December 17, 2014, ahead of its previously anticipated in-service date of the first quarter 2015.

The Company is progressing the construction of the newly-acquired
SEEP facility. The project is currently on budget and on schedule for a mid-2015 in-service date
with plant site construction approximately 25 percent complete. All regulatory and environmental approvals have been obtained and
all engineering, fabrication and construction services have been largely contracted.

Pembina's Saturn II Facility (a 200 MMcf/d 'twin' of the
Saturn I Facility) is on schedule and on budget and is expected to be commissioned in the third quarter and placed into service
by late-2015. To-date, the Company has completed 36 percent of site construction.

Once the facilities listed above come on-stream, Pembina
expects Gas Services' processing capacity to reach 1.5 bcf/d (net to Pembina), including ethane-plus extraction capacity of 870
MMcf/d (net to Pembina). The volumes from Pembina's existing assets and those under development (as discussed above) will be processed
largely on a contracted, fee-for-service basis and could result in 70 mbpd of NGL, subject to gas compositions, that would be transported
for toll revenue on Pembina's Conventional Pipelines. Volumes from these projects support Pembina's pipeline expansion plans as
discussed under "Conventional Pipelines."



12









Pembina
Pipeline Corporation



Midstream

|                                                                           | 3 Months Ended
        December 31(1)
        (unaudited) | 12 Months Ended
        December 31(1)
|-------------------------------------------------------------------------- | --------------------------------------------------------- | --------------------------------------
|($ millions, except where noted)                                           | 2014                                                      | 2013                                  
|NGL sales volume (mbpd)                                                    | 130                                                       | 122                                   
|Revenue                                                                    | 1,052                                                     | 1,115                                 
|Cost of goods sold, including product purchases                            | 991                                                       | 932                                   
|Net revenue(2)                                                             | 61                                                        | 183                                   
|Operating expenses                                                         | 12                                                        | 19                                    
|Realized gain (loss) on commodity-related derivative financial instruments | 8                                                         | (3)                                   
|Operating margin(2)                                                        | 57                                                        | 161                                   
|Depreciation and amortization included in operations                       | 34                                                        | 26                                    
|Unrealized gain on commodity-related derivative financial instruments      | 13                                                        | 3                                     
|Gross profit                                                               | 36                                                        | 138                                   
|Capital expenditures                                                       | 135                                                       | 87                                    

| | (1) | Share of loss 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 assets include
17 truck terminals (including three capable of emulsion treatment and water disposal) and terminalling at downstream hub locations
at the Pembina Nexus Terminal ("PNT"), which features storage, crude-oil-by-rail services and terminal connectivity.
PNT includes: 21 inbound pipeline connections; 13 outbound pipeline connections; in excess of 1.2 mmbpd of crude oil and condensate
supply connected to the terminal; and 310 mbbls of surface storage in and around the Edmonton and Fort Saskatchewan, Alberta areas.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | o | The Redwater West NGL system ("Redwater West") includes
the 750 MMcf/d (322.5 MMcf/d net to Pembina) Younger extraction and fractionation facility in B.C.; a 73 mbpd NGL fractionator
and 7.9 mmbbls of finished product cavern storage at Redwater, Alberta; and third-party fractionation capacity in Fort Saskatchewan,
Alberta. Redwater West purchases NGL mix from various natural gas and NGL producers and fractionates it into finished products
for further distribution and sale. Also located at the Redwater site is Pembina's rail-based terminal which services Pembina's
proprietary and customer needs for importing and exporting specification NGL and crude oil.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | The Empress East NGL system ("Empress East") includes 2.3
bcf/dcapacity in the straddle plants at Empress, Alberta; 20 mbpd of fractionation capacity and 1.1 mmbbls of cavern storage
in Sarnia, Ontario; and 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 further fractionation, distribution and sale.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



13







Pembina
Pipeline Corporation



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

Operational & Financial Performance

In the Midstream business,net revenue was $587 million in 2014 compared to $580 million in 2013. Higher net revenue
was primarily due to increased storage opportunities in the first half of 2014 along with higher throughputvolumes and
wider margins, offset by a challenging fourth quarter, as noted below. Pembina generated net revenue of $61 million during the
fourth quarter of 2014, down from $183 million during the fourth quarter of 2013. The decrease was largelydue to the significant
decline in commodity prices (particularly the weaker quarter-over-quarter propane prices), which resulted in Pembina recording
an inventory write-down of $38 million. Lower price differentials across all commodities, combined with lower crude oil midstream
storage revenue, also contributed to the decrease in net revenue from the prior period.

Operating expenses during the full-year and fourth quarter
of 2014 were $69 million and $12 million, respectively, compared to $91 million and $19 million in the comparable periods of 2013.
The decrease during the full-year and fourth quarter was largely due to the Company's sale of its non-core trucking-related subsidiary
in the third quarter of 2014.

Operating margin was $528
million during the full-year and $57 million during the fourth quarter of 2014 compared to $486 million and $161 millionin
the respective periods of 2013. The increase in full-year operating margin was primarily due to
stronger NGL pricing early in the year and the factors that positively impacted annual net revenue, discussed above. Lower fourth
quarter net revenue in 2014, as previously mentioned, contributed to the decrease in operating margin over the comparable period
in 2013.

The Company's crude oil
midstream operating margin for the year ended December 31, 2014 totalled $188 million compared to $147 million during the prior
year. The higher full-year results were due to increased storage opportunities in the first half of 2014, higher volumes and wider
margins offset bylower price differentials and lower storage revenue later in 2014. Crude
oil midstream operating margin was $36 million in the fourth quarter of 2014 compared to $47 million in the same period of 2013.
This decrease was largely due to the factors which impacted net revenue, particularly low differentials and weaker commodity prices.

For the year ended December
31, 2014, operating margin for NGL midstream was $340 million compared to $339 million during 2013. Despite weak fourth quarter
results, NGL midstream contributed strong operating margin for 2014, primarily related to positive market prices for propane, particularly
in Empress East, earlier in the year. Operating margin for Pembina's NGL midstream activities was $21 million for the fourth quarter
of 2014 compared to $114 million for the fourth quarter of 2013. The rapid decline in market pricing for NGL in general and propane
specifically throughout the fourth quarter contributed to this reduction.Pembina's average realized sales price for propane
declined approximately 30 percent in the fourth quarter of 2014 compared to the same period of 2013. Further, while
NGL sales volumes were seven percent higher during the fourth quarter of 2014 than during the same period of 2013, at 130 mbpd,
the low commodity price environment inhibited Pembina's ability to generate revenue on these volumes. Volumes increased primarily
due to higher ethane production at Empress East resulting from Pembina's increased ownership share in the Empress Facilities as
well as opportunities related to gas extraction.



14









Pembina
Pipeline Corporation



Full-year depreciation and amortization included in operations
for Pembina's Midstream business totalled $135 million, up from $114 million in 2013. This increase reflects the growth in this
business' asset base since the prior period. Additionally, in the second quarter of 2014, the Company recognized a $13 million
charge for accelerated depreciation associated with the disposal of non-core trucking-related assets. Depreciation and amortization
included in operations during the fourth quarter of 2014 totalled $34 million compared to $26 million during the fourth quarter
of 2013, with the increase attributable to the same reasons which impacted the full-year.

For the twelve and three months ended December 31, 2014,
gross profit in this business was $407 million and $36 million, respectively, compared to $378 million and $138 million during
the same periods in 2013 due to the same factors which impacted net revenue, operating expenses, and depreciation and amortization
included in operations, as noted above.

For the year ended December 31, 2014,
capital expenditures within the Midstream business totalled $390 million compared to $254 million during 2013. Capital spending
in this business in 2014 was primarily directed towards the development of Pembina's second fractionator ("RFS II") as
well as NGL storage caverns and associated infrastructure. Capital was also deployed to progress the build-out of Pembina's full-service
terminal network, including completion of the Cynthia Full-Service Terminal, which commenced service in June 2014 and above-ground
storage in the Edmonton area. Capital expenditures in 2013 primarily related to cavern development at the Company's Redwater facility.

New Developments

Pembina continues to progress facility construction of
its second 73 mbpd ethane-plus fractionator at the Company's Redwater site ("RFS II"). Over 80 percent of equipment has
been set on site and module fabrication is substantially complete. On site construction is currently 65 percent complete. The project
is on schedule and anticipated to be on-stream late in the fourth quarter of 2015.

With the addition of RFS III, Pembina's third fractionator
at its Redwater site with propane-plus capacity of 55 mbpd, which was announced in May 12, 2014, fractionation capacity will total
210 mbpd, making the Company's Redwater complex the largest fractionation facility in Canada. Detailed engineering work is underway
and over 30 percent of long-lead equipment has been ordered, with all critical orders in place. Pembina has now received regulatory
approval and has submitted its application for environmental approval, which it anticipates receiving later this year. Subject
to obtaining this approval, Pembina expects RFS III to be in-service in the third quarter of 2017. Overall, the project is tracking
on schedule and on budget.

As announced on October 9, 2014, Pembina plans to develop
the Canadian Diluent Hub ("CDH"), a large-scale condensate and diluent terminal at its Heartland Terminal site near Fort
Saskatchewan, Alberta. The proposed facilities are designed to accommodate contracted diluent supply volumes from the Company's
previously announced field gas plant, pipeline and NGL fractionator expansions. The Company expects CDH to become a new market
hub for condensate and other diluents by offering its customers a variety of value-added services.

Site preparation began in late-2013 and is on-going. Subject
to further regulatory and environmental approvals, Pembina anticipates phasing-in incremental pipeline connections to regional
condensate delivery systems in 2016 with a view to achieving full connectivity and service offerings at CDH in mid-2017.

On June 16, 2014, Pembina's Midstream business placed a new full-service
truck terminal in the Cynthia area of Alberta into service which was operating at full capacity by the end of the year. The Company
also continued with the development of storage capacity at its Edmonton North Terminal. During the fourth quarter, Pembina progressed
construction at the site with a view to bringing the additional 540 mbbls of above-ground storage tanks into service in mid-2016.



15







Pembina
Pipeline Corporation



At its storage and terminalling facilities in Corunna,
Ontario, Pembina progressed development of a new brine pond, rail upgrades, and the installation of a new propane truck rack to
meet increased demand for services. Pembina also continued throughout the year on its underground hydrocarbon cavern development
program at its Redwater facility.

In September, the Company communicated its plans to
proceed with developing a 37 mbpd west coast propane export terminal under an agreement with the Port of Portland, Oregon. This
agreement sets forth the terminal site, which includes an existing marine berth located within the city of Portland, for the development
of the project. Since the announcement, Pembina's dedicated project team is continuing to make progress with community, regulatory
and special interest group engagement, and is also advancing detailed engineering design work in advance of a number of permit
applications to be submitted throughout 2015. The project is anticipated to be brought into service in early-2018 (subject to obtaining
required permits and approvals). The Company expects that the proposed terminal will provide growing Canadian propane supply (that
is derived from natural gas produced in western Canada) with access to large, international markets, while complementing Pembina's
expanding integrated service offering for products that are derived from natural gas.

Acquisition of Vantage Pipeline

On October 24, 2014, Pembina acquired the Vantage Pipeline
and Mistral Midstream Inc.'s ("Mistral") interest in SEEP for total consideration of $733 million (U.S.$653 million).
To enact the purchase, Pembina acquired all of the issued and outstanding equity interests of Vantage Pipeline Canada ULC, Vantage
Pipeline US LP and Mistral. Consideration for the transaction consisted of cash of $217 million (U.S.$193 million), the issuance
of 5,610,317 common shares of the Company valued at $266 million (U.S.$237 million), and repayment of Vantage's bank indebtedness
of $250 million (U.S.$223 million) at closing (the "Vantage Acquisition"). The fair value of the common shares issued
was based on the TSX listed share price on the date of the Vantage Acquisition.

The Vantage Pipeline is a recently constructed high
vapour pressure pipeline that is approximately 700 km long with a capacity of approximately 40 mbpd. The pipeline originates in
Tioga, North Dakota and terminates near Empress, Alberta and it provides long-term, fee-for-service cash flow and access to the
North Dakota Bakken play for future NGL opportunities. The Vantage Pipeline forms part of Pembina's Conventional Pipelines business.

As part of the Vantage Acquisition, Pembina also acquired
pipeline infrastructure from Mistral and Mistral's interest in SEEP, an under construction, 60 MMcf/d deep cut gas processing facility
that is centrally located to service the southeast Saskatchewan Bakken region. SEEP, which is underpinned by both a long-term ethane
sales agreement and a long-term, fee-for-service processing agreement, is expected to produce approximately 4.5 mbpd of ethane
and connects into the Vantage Pipeline through a pipeline lateral. Pembina expects SEEP and the associated pipeline lateral to
be in-service in mid-2015. SEEP and the associated pipeline lateral form part of Pembina's Gas Services business.

Subsequent to year end, the Company announced on February
10, 2015 that it has entered into agreements to proceed with Vantage Expansion for an estimated capital cost of $85 million. Subject
toregulatory and environmental approvals, the Vantage Expansion is expected to be in-service in early-2016. See "Operating
Results – Conventional Pipelines – New Developments" for more information.



16







Pembina
Pipeline Corporation



Other Non-Operating Expenses

Pension Liability

Pembina maintains a defined contribution plan and non-contributory
defined benefit pension plans covering employees and retirees. The defined benefit plans include a funded registered plan for all
qualified employees and an unfunded supplemental retirement plan for those employees affected by the Canada Revenue Agency maximum
pension limits. At the end of 2014, the pension plans carried an obligation of $20 million compared to an obligation of $2 million
at the end of 2013. At December 31, 2014, plan obligations amounted to $157 million (2013: $126 million) compared to plan assets
of $138 million (2013: $124 million). In 2014, the pension plans' expense was $8 million (2013: $10 million). Contributions to
the pension plans totaled $10 million in 2014 and $13 million in 2013.

In 2015, contributions to the pension plans are expected
to be $9 million and the pension plans' net expenses are anticipated to be $12 million. Management anticipates an annual increase
in compensation of four percent, which is consistent with current industry standards.

Financing Activity

On January 16, 2014, Pembina closed its offering of 10
million cumulative redeemable rate reset class A preferred shares, Series 5 ("Series 5 Preferred Shares") at a price
of $25.00 per share for aggregate proceeds of $250 million. Dividends on the Series 5 Preferred Shares are $0.3125 quarterly, or
$1.25 per share on an annualized basis, payable 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 Series 5 Preferred Shares began trading on the Toronto Stock Exchange on January 16, 2014 under the symbol PPL.PR.E.

On April 4, 2014, the Company issued $600 million senior
unsecured medium-term notes and subsequently repaid the $75 million senior unsecured term facility on April 7, 2014 and the $175
million senior unsecured notes (Series A) on June 16, 2014.

On September 11, 2014, Pembina closed its offering of
10 million cumulative redeemable rate reset class A preferred shares, series 7 ("Series 7 Preferred Shares") at a price
of $25.00 per share for aggregate gross proceeds of $250 million. Dividends on the Series 7 Preferred Shares are $0.2813 quarterly,
or $1.125 per share on an annualized basis, payable 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 December 1, 2019. The Series 7 Preferred
Shares began trading on the Toronto Stock Exchange on September 11, 2014 under the symbol PPL.PR.G.

Subsequent to the year-end, on February 2, 2015, Pembina
closed an offering of $600 million of senior unsecured medium-term notes. The offering was conducted in two tranches consisting
of $450 million in senior unsecured medium-term notes, series 5 having a fixed coupon of 3.54 percent per annum, paid semi-annually,
and maturing on February 3, 2025, and $150 million through the re-opening of its 4.75 percent medium-term notes, series 3, due
April 30, 2043. Net proceeds were used to reduce short-term indebtedness of the Company under its credit facilities, and will also
be used to fund Pembina's capital program and for other general corporate purposes.



17







Pembina
Pipeline Corporation



Liquidity & Capital Resources

|($ millions)                                            | December 31, 2014 | December 31, 2013
|------------------------------------------------------- | ----------------- | -----------------
|Working capital(1)                                      | (17)              | (170)            
|Variable rate debt(2)                                   |                   |                  
|Bank debt                                               | 510               | 50               
|Total variable rate debt outstanding (average of 2.74%) | 510               | 50               
|Fixed rate debt(2)                                      |                   |                  
|Senior unsecured notes                                  | 467               | 642              
|Senior unsecured term debt                              |                   | 75               
|Senior unsecured medium-term notes                      | 1,500             | 900              
|Subsidiary debt                                         |                   | 8                
|Total fixed rate debt outstanding (average of 4.8%)     | 1,967             | 1,625            
|Convertible debentures(2)                               | 410               | 633              
|Finance lease liability                                 | 10                | 9                
|Total debt and debentures outstanding                   | 2,897             | 2,317            
|Cash and unutilized debt facilities                     | 1,073             | 1,531            

| | (1) | As at December 31, 2014, working capital includes $4 million (December 31, 2013: $262 million) associated with the current
portion of loans and borrowings.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

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

Pembina anticipates cash flow from operating activities
will be more than sufficient to meet its short-term operating obligations and fund its targeted dividend level. Recent global economic
conditions have had a downward effect on commodity pricing; however, Pembina's business model is largely comprised of cash flow
derived from fee-for-service arrangements, which helped mitigate the impact of the market downturn during the latter part of 2014.
Pembina believes that its reliable cash flow, limited commodity exposure (with the exception of portions of its Midstream business)
and strong credit profile will enable it to preserve its financial strength into the foreseeable future, particularly as the Company
brings its $5.8 billion of long-term, fee-for-service-based projects into service throughout the 2015 to late 2017 timeframe. In
the short-term, Pembina expects to source funds required for capital projects from cash and cash equivalents, unutilized debt facilities
and the DRIP. Further, based on its successful access to financing in the debt and equity markets recently and over the past several
years, Pembina believes it should continue to have access to funds at attractive rates, if and when required, despite the recent
weakened global economic environment. Refer to "Risk Factors – Additional Financing and Capital Resources" for
more information. Management remains satisfied that the leverage employed in Pembina's capital structure 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.

Pembina's credit facilities at December 31, 2014 consisted
of an unsecured $1.5 billion (2013: $1.5 billion) revolving credit facility, which maturity was extended during the year to March
2019, and an operating facility of $30 million (2013: $30 million) due July 2015, 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 (2013: nil to 1.25 percent) or Bankers' Acceptances rates plus 1.00 percent to 2.25 percent (2013: 1.0 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, 2014, Pembina had $1,073 million (2013: $1,531 million) of cash and unutilized
debt facilities. Pembina also had an additional $38 million (2013: $8 million) in letters of credit issued in a separate demand
letter of credit facility. At December 31, 2014, Pembina had loans and borrowings (excluding amortization, letters of credit and
finance lease liabilities) of $2,477 million (2013: $1,675 million). Pembina's senior debt to total capital at December 31, 2014
was 27 percent (2013: 22 percent). Pembina is required to meet certain specific and customary affirmative and negative financial
covenants under its senior unsecured notes, medium-term notes and revolving credit and operating facilities including a requirement
to maintain certain financial ratios. Pembina is also subject to customary restrictions on its operations and activities under
its notes and facilities, including restrictions on the granting of security, incurring indebtedness and the sale of its assets.
Pembina was in compliance with all covenants under its notes and facilities as at the quarter ended December 31, 2014 and as at
December 31, 2013.



18







Pembina
Pipeline Corporation



During the fourth quarter of 2014, $21 million of Pembina's
convertible debentures (face value) were converted into one million common shares. The conversions were primarily of Series C convertible
debentures maturing November 30, 2020 with a conversion price of $28.55 per common share.

Credit Ratings

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

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

Capital Expenditures

|                          | 3 Months Ended
        December 31
        (Unaudited) | 12 Months Ended
        December 31
|------------------------- | ------------------------------------------------------ | -----------------------------------
|($ millions)              | 2014                                                   | 2013                               
|Development capital       |                                                        |                                    
|Conventional Pipelines    | 232                                                    | 126                                
|Oil Sands & Heavy Oil     | 6                                                      | 5                                  
|Gas Services              | 79                                                     | 56                                 
|Midstream                 | 135                                                    | 87                                 
|Corporate/other projects  | 31                                                     | 1                                  
|Total development capital | 483                                                    | 275                                

During the full-year and fourth quarter of 2014, capital
expenditures were $1,412 million and $483 million, respectively, compared to $880 million and $275 million in the same periods
of 2013.

The majority of the capital expenditures in the 2014 periods were
in Pembina's Conventional Pipelines, Midstream, and Gas Services businesses. Conventional Pipelines' capital was for the most part
incurred to complete its previously announced Simonette Expansion and progress its Phase II and Phase III Expansions. Midstream's
capital expenditures were primarily directed towards RFS II, cavern development, the Cynthia Full-Service Terminal, above ground
storage and related infrastructure at the Redwater facility. Gas Services' capital was deployed to progress the Resthaven, Saturn
II and Musreau II facilities.



19









Pembina
Pipeline Corporation



With respect to Pembina's planned capital expenditures
for 2015, 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 "Risk Factors – Possible Failure to Realize Anticipated
Benefits of Corporate Strategy" and Pembina's press release dated December 1, 2014.

Contractual Obligations at December
31, 2014

|($ millions)                     | Payments Due By Period
|-------------------------------- | ----------------------
|Contractual Obligations          | Total                 
|Operating and finance leases(1)  | 745                   
|Loans and borrowings(2)(4)       | 3,951                 
|Convertible debentures(2)        | 534                   
|Construction commitments(3)(5)   | 1,983                 
|Provisions                       | 410                   
|Total contractual obligations(2) | 7,623                 

| | (1) | Includes office space, vehicles, and over 3,500 rail car leases supporting future propane transportation in the Midstream business
(approximately 1,200 rail car leases at December 31, 2014).
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Excluding deferred financing costs.
| | --- | -----------------------------------

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

| | (4) | Including interest payments on senior unsecured notes.
| | --- | ------------------------------------------------------

| | (5) | Including investment commitments to equity accounted investees of $5 million.
| | --- | -----------------------------------------------------------------------------

Pembina is, subject to certain conditions, contractually
committed to the construction and operation of the Saturn II Facility, the Musreau II and III facilities, the Resthaven Expansion,
SEEP, RFS II, RFS III, the Phase II, III and NEBC pipeline expansions, as well as certain pipeline connections and laterals and
select caverns at the Company's Redwater site. See "Forward-Looking Statements & Information" and "Liquidity
& Capital Resources."

The Company updated its estimates for decommissioning
obligations as outlined in Note 15 to the Consolidated Financial Statements. The Company has estimated the net present value of
its total decommissioning obligations based on a total future liability of $410 million (2013: $309 million). The estimate has
applied a medium-term inflation rate and current discount rate and includes a revision in the decommissioning assumptions and associated
costs and timing of payments. The obligations are expected to be paid over the next 75 years (2013: 75 years) with majority being
paid between 30 and 40 years. The Company applied a 2 percent inflation rate per annum (2013: 2 percent) and a risk free rate of
2.3 percent (2013: 3.2 percent) to calculate the present value of the decommissioning provision.



20







Pembina
Pipeline Corporation



Trading Activity and Total Enterprise
Value(1)

|                                               |                          | As
                                         at and for the 12
        months
        ended
|---------------------------------------------- | ------------------------ | ------------------------------------------------------------------------------------------
|($
    millions, except where noted)           | February
    24, 2015(2) | December
    31, 2014                                                                     
|Trading
    volume and value                   |                          |                                                                                           
|Total
    volume (millions of shares)          | 40                       | 240                                                                                       
|Average
    daily volume (thousands of shares) | 1,091                    | 955                                                                                       
|Value
    traded                               | 1,592                    | 10,379                                                                                    
|Shares
    outstanding (millions of shares)    | 340                      | 338                                                                                       
|Closing
    share price (dollars)              | 39.82                    | 42.34                                                                                     
|Market
    value                               |                          |                                                                                           
|Common
    shares                              | 13,526                   | 14,308                                                                                    
|Series
    1 Preferred Shares (PPL.PR.A)       | 216(3)                   | 244(4)                                                                                    
|Series
    3 Preferred Shares (PPL.PR.C)       | 135(6)                   | 150(7)                                                                                    
|Series
    5 Preferred Shares (PPL.PR.E)       | 251(9)                   | 257(10)                                                                                   
|Series
    7 Preferred Shares (PPL.PR.G)       | 242(11)                  | 250(12)                                                                                   
|5.75%
    convertible debentures (PPL.DB.C)    | 324(13)                  | 347(14)                                                                                   
|5.75%
    convertible debentures (PPL.DB.E)    | 38(16)                   | 37(17)                                                                                    
|5.75%
    convertible debentures (PPL.DB.F)    | 206(19)                  | 208(20)                                                                                   
|Market
    capitalization                      | 14,938                   | 15,801                                                                                    
|Senior
    debt                                | 2,607                    | 2,477                                                                                     
|Cash
    and cash equivalents                  | (26)                     | (53)                                                                                      
|Total
    enterprise value(22)                 | 17,519                   | 18,225                                                                                    



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

| | (2) | Based
                                         on 37 trading days from January 2, 2015 to February 24, 2015, inclusive.
| | --- | -----------------------------------------------------------------------------------------------------------------------

| | (3) | 10
                                         million preferred shares outstanding at a market price of $21.65 at February 24, 2015.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------

| | (4) | 10
                                         million preferred shares outstanding at a market price of $24.40 at December 31, 2014.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------

| | (5) | 10
                                         million preferred shares outstanding at a market price of $24.26 at December 31, 2013.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------

| | (6) | 6
                                         million preferred shares outstanding at a market price of $22.50 at February 24, 2015.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------

| | (7) | 6
                                         million preferred shares outstanding at a market price of $24.97 at December 31, 2014.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------

| | (8) | 6
                                         million preferred shares outstanding at a market price of $25.15 at December 31, 2013.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------

| | (9) | 10
                                         million preferred shares outstanding at a market price of $25.11 at February 24, 2015.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------

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

| | (11) | 10
                                         million preferred shares outstanding at a market price of $24.15 at February 24, 2015.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------

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

| | (13) | $231
                                         million principal amount outstanding at a market price of $140.00 at February 24, 2015
                                         and with a conversion price of $28.55.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (14) | $236
                                         million principal amount outstanding at a market price of $147.00 at December 31, 2014
                                         and with a conversion price of $28.55.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (15) | $299
                                         million principal amount outstanding at a market price of $132.63 at December 31, 2013
                                         and with a conversion price of $28.55.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (16) | $23
                                         million principal amount outstanding at a market price of $160.90 at February 24, 2015
                                         and with a conversion price of $24.94.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | (18) | $163
                                         million principal outstanding at a market price of $149.95 at December 31, 2013 and with
                                         a conversion price of $24.94.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (19) | $150
                                         million principal amount outstanding at a market price of $137.84 at February 24, 2015
                                         and with a conversion price of $29.53.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

| | (21) | $172
                                         million principal outstanding at a market price of $127.50 at December 31, 2013 with
                                         a conversion price of $29.53.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (22) | Refer
                                         to "Non-GAAP and Additional GAAP Measures."
| | ---- | ------------------------------------------------------------------------------------------

As indicated in the table above, Pembina's total enterprise
value was $18.2 billion at December 31, 2014. The increase from 2013 was primarily due to greater common shares outstanding related
to the DRIP and debenture conversions, shares issued in relation to the Vantage Acquisition, an increase in the price of Pembina's
common shares and the addition of the preferred shares and additional debt.

Common Share Dividends

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

Preferred Share Dividends

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



21







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 year end and fourth
quarter 2014 was 57 percent of common shares outstanding. Proceeds for 2014 and the fourth quarter of 2014 totalled $321 million
and $83 million respectively.

Critical Accounting Estimates

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

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

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

Judgments



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

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

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

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

| | (iii) | Functional currency
| | ----- | -------------------

The determination of the Company's and its subsidiaries'
functional currency requires assessing several factors, including the currency that predominantly influences sales price, operational
and other costs, and to a lesser extent financing of the operations. Management has determined the functional currency of certain
Conventional Pipelines operations to be the U.S. dollar. The functional currency of all other entities was determined to be the
Canadian dollar.

| | (iv) | Impairment
| | ---- | ----------

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



22







Pembina
Pipeline Corporation



Estimates

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

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

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

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

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 that the Company will utilize
technology and materials that are currently available.

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

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

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

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

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

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

Changes in Accounting Policies

The following new standards, interpretations, amendments
and improvements to existing standards issued by the International Accounting Standards Board ("IASB") or International
Financial Reporting Standards Interpretations Committee ("IFRIC") were adopted as of January 1, 2014 without any material
impact to Pembina's Financial Statements: IAS 32 Financial Instruments and IFRIC 21 Levies.

New Standards and Interpretations Not
Yet Adopted

Certain new standards, interpretations, amendments and improvements
to existing standards were issued by the IASB or IFRIC and are effective for accounting periods beginning on or after January 1,
2015. These standards have not been applied in preparing these Consolidated Financial Statements. Those which may be relevant to
Pembina are described below:



23







Pembina
Pipeline Corporation



IFRS 9 Financial Instruments (2014) is effective January
1, 2018 and is available for early 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.

IFRS 15 Revenue from Contracts with Customers is effective
for annual periods beginning on or after January 1, 2017. The Company intends to adopt IFRS 15 for the annual period beginning
on January 1, 2017. The Company is currently evaluating the impact that the standard will have on its results of operations and
financial position.

Controls and Procedures

Disclosure Controls and Procedures

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

An evaluation, as of December 31, 2014, of the effectiveness
of the design and operation of Pembina's disclosure controls and procedures, as defined in Rule 13a – 15(e) and 15d –
15(e) under the United States Securities Exchange Act of 1934, as amended (the "Exchange Act") and National Instrument
52-109 Certification of Disclosure in Issuer's Annual and Interim Filings ("NI 52-109"), was carried out by management,
including the Chief Executive Offer ("CEO") and the Chief Financial Officer ("CFO"). Based on that evaluation,
the CEO and CFO have concluded that the design and operation of Pembina's disclosure controls and procedures were effective as
at December 31, 2014 to ensure that material information relating to the Company is made known to the CEO and CFO by others, particularly
during the period during which the annual filings are being prepared.

It should be noted that while the CEO and CFO believe
that Pembina's disclosure controls and procedures provide a reasonable level of assurance that they are effective, they do not
expect that Pembina's disclosure controls and procedures will prevent all errors 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.

Internal Control over Financial Reporting

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

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

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

Based on management's assessment as at December 31,
2014, the CEO and CFO have concluded that Pembina's internal control over financial reporting is effective.

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



24







Pembina
Pipeline Corporation



The effectiveness of internal control over financial
reporting as of December 31, 2014 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 2014 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.

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. The risks that may
affect the business and operation of Pembina and its operating subsidiaries are described at a high level within this
MD&A and more fully within Pembina's Annual Information Form ("AIF"), an electronic copy of which is available
at www.pembina.com or on Pembina's SEDAR profile at www.sedar.com. Further, additional discussion about counterparty risk,
market risk, liquidity risk and additional information on financial risk management can be found in Note 24 to the
Consolidated Financial Statements.

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

Operational Risks

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



25







Pembina
Pipeline Corporation



Additional Financing and Capital Resources

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

Commodity price risk

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

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



26







Pembina
Pipeline Corporation



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 and some of its
capital 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.

Reputation

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



27







Pembina
Pipeline Corporation



Environmental Costs and Liabilities

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

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

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

Abandonment Costs

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



28









Pembina
Pipeline Corporation



Pembina has complied with the National Energy Board ("NEB")
requirements on its NEB-regulated pipelines for the creation of abandonment funds and has completed the compliance-based filings
that are required under the applicable NEB rules and regulations regarding the abandonment of its pipeline systems and assets.
Pembina also has a 50 percent ownership in a NEB-regulated pipeline lateral which is operated by a joint venture partner. The joint
venture partner is responsible for the submission of the NEB-compliance based filings for this asset, which Pembina is in the process
of reviewing. Pembina will continue to monitor any regulatory changes prior to the next five-year review, and will complete the
annual reporting as required by the NEB. Pembina-operated rate regulated pipelines account for less than 206 km, or three percent,
of the total infrastructure in the Conventional Pipelines business.

Reserve Replacement, Throughput and Product Demand

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

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

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 or achieving technological
improvements to increase recovery rates, and the gas plants and the pipelines may not be able to maintain existing volumes of throughput.
Commodity prices may not remain at a level which encourages producers to explore for and develop additional reserves or produce
existing marginal reserves. Given the current adverse global economic conditions, the prices of these products have decreased substantially
from recently high levels and the risks that producers will not seek reserves additions has heightened. Lower production volumes
will also increase the competition for natural gas supply at gas processing plants which could result in higher shrinkage premiums
being paid to natural gas producers.



29







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



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



Completion and Timing of Expansion Projects

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

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



30









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 Pembina. Large-scale acquisitions in particular may involve
significant pricing and integration risk. As part of its ongoing strategy, Pembina may complete acquisitions of assets or other
entities in the future. Achieving the benefits of completed and future acquisitions depends in part on successfully consolidating
functions and integrating operations, procedures and personnel in a timely and efficient manner, as well as Pembina's ability
to realize the anticipated growth opportunities and synergies from combining the acquired businesses and operations with those
of Pembina. The integration of acquired businesses and entities requires the dedication of substantial management effort,
time and resources which may divert management's focus and resources from other strategic opportunities and from operational matters
during this process. The integration process may result in the loss of key employees and the disruption of ongoing business, customer
and employee relationships that may adversely affect Pembina's ability to achieve the anticipated benefits of any acquisitions.
Acquisitions may also expose Pembina to additional risks, including entry into markets or businesses in which Pembina has little
or no direct prior experience, increased credit risks through the assumption of additional debt, costs and contingent liabilities
and exposure to liabilities of the acquired business or assets.

Debt Service

At the end of 2014, Pembina had exposure to floating interest
rates on $510 million in debt, which was subsequently repaid in February 2015. Debt exposure is managed by using derivative financial
instruments. A one percent change in short-term interest rates would have an annualized impact of approximately $4 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. 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. Variations in
interest rates and scheduled principal repayments for which Pembina may not be able to refinance at favourable rates, or at all,
could result in significant changes in the amount required to be applied to service debt, which could have detrimental effects
on the amount of cash available for common share dividends. Pembina, on a consolidated basis, is also required to meet certain
financial covenants under the credit facilities and is subject to customary restrictions on its operations and activities, including
restrictions on the granting of security, incurring indebtedness and the sale of its assets.



31







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 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

|                                                         | 2014  | 2013  | 2012 
|-------------------------------------------------------- | ----- | ----- | -----
|                                                         | Q4    | Q3    | Q2   
|Average volume
        (mbpd unless stated otherwise)    |       |       |      
|Conventional Pipelines throughput                        | 612   | 564   | 573  
|Oil Sands & Heavy Oil contracted capacity, end of period | 880   | 880   | 880  
|Gas Services processing (mboe/d)(1)                      | 97    | 71    | 87   
|NGL sales volume                                         | 130   | 107   | 105  
|Total                                                    | 1,719 | 1,622 | 1,645

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



32









Pembina
Pipeline Corporation



Selected Quarterly Financial Information

|                                                                                          | 2014  | 2013  | 2012 
|----------------------------------------------------------------------------------------- | ----- | ----- | -----
|($ millions, except where noted)                                                          | Q4    | Q3    | Q2   
|Revenue                                                                                   | 1,259 | 1,445 | 1,606
|Operating expenses                                                                        | 117   | 98    | 91   
|Cost of goods sold, including product purchases                                           | 955   | 1,087 | 1,246
|Realized gain (loss) on commodity-related derivative financial instruments                | 8     | 4     |      
|Operating margin(1)                                                                       | 195   | 264   | 269  
|Depreciation and amortization included in operations                                      | 62    | 51    | 51   
|Unrealized gain (loss) on commodity-related derivative financial instruments              | 11    | 3     | (4)  
|Gross profit                                                                              | 144   | 216   | 214  
|EBITDA(1)                                                                                 | 170   | 199   | 235  
|Cash flow from operating activities                                                       | 196   | 188   | 155  
|Cash flow from operating activities per
        common share – basic
        (dollars)(1) | 0.58  | 0.57  | 0.48 
|Adjusted cash flow from operating activities(1)                                           | 164   | 158   | 191  
|Adjusted cash flow from operating activities per common share – basic(1)(dollars)         | 0.49  | 0.48  | 0.59 
|Earnings for the period                                                                   | 84    | 75    | 77   
|Earnings per common share – basic (dollars)                                               | 0.22  | 0.20  | 0.21 
|Earnings per common share – diluted (dollars)                                             | 0.22  | 0.20  | 0.21 
|Common shares outstanding (millions):                                                     |       |       |      
|Weighted average – basic                                                                  | 335   | 327   | 323  
|Weighted average – diluted                                                                | 336   | 329   | 325  
|End of period                                                                             | 338   | 329   | 325  
|Common share dividends declared                                                           | 146   | 143   | 140  
|Common dividends per share(dollars)                                                       | 0.435 | 0.435 | 0.430
|Preferred share dividends declared                                                        | 10    | 8     | 7    

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



During the periods in the previous table, 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
WCSB (Deep Basin, Montney and emerging Duvernay Shale plays), which resulted in increased gas gathering and processing at the Company's
Gas Services assets, additional associated NGL transported on its pipelines and expansion of its fractionation capacity;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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



33







Pembina
Pipeline Corporation



| | · | An improved propane market in North America throughout the fourth
quarter of 2013 and first quarter of 2014 and an overall significantly weaker commodity market (especially the weaker propane market)
during the fourth quarter of 2014;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Increased shares outstanding due to: the DRIP, debenture conversions,
the Vantage Acquisition and the bought deal equity financing in the first quarter of 2013; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | Increased preferred share dividend payments due to additional preferred
shares issued in the first and third quarter of 2014.
| | - | -----------------------------------------------------------------------------------------------------------------------------

Selected Annual Financial Information

|($ millions, except where noted)                  | 2014   | 2013  | 2012 
|------------------------------------------------- | ------ | ----- | -----
|Revenue                                           | 6,069  | 5,006 | 3,427
|Earnings                                          | 383    | 351   | 225  
|Per common share – basic (dollars)                | 1.07   | 1.12  | 0.87 
|Per common share – diluted (dollars)              | 1.06   | 1.12  | 0.87 
|Total assets                                      | 11,262 | 9,142 | 8,284
|Long-term financial liabilities(1)                | 3,428  | 2,454 | 3,005
|Declared dividends per common share ($ per share) | 1.72   | 1.65  | 1.61 
|Preferred share dividends declared                | 31     | 5     |      

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

Additional
Information

Additional information about Pembina filed with Canadian
and U.S. securities commissions, including quarterly and annual reports, AIFs (filed with the U.S. Securities and Exchange Commission
under Form 40-F), Management Information Circulars and financial statements can be found online at www.sedar.com, www.sec.gov and
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 the performance of Pembina and its businesses. Since
non-GAAP and additional GAAP measures do not have a standardized meaning prescribed by GAAP and are therefore unlikely to be comparable
to similar measures presented by other companies, securities regulations require that non-GAAP and additional GAAP measures are
clearly defined, qualified and reconciled to their nearest GAAP measure. Except as otherwise indicated, these non-GAAP and additional
GAAP measures are calculated and disclosed on a consistent basis from period to period. Specific adjusting items may only be relevant
in certain periods.

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

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

34







Pembina
Pipeline Corporation



Net revenue

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

|                                               | 3 Months Ended
        December 31
        (unaudited) | 12 Months Ended
        December 31
|---------------------------------------------- | ------------------------------------------------------ | -----------------------------------
|($ millions)                                   | 2014                                                   | 2013                               
|Revenue                                        | 1,259                                                  | 1,282                              
|Cost of goods sold,including product purchases | 955                                                    | 903                                
|Net revenue                                    | 304                                                    | 379                                

EBITDA

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

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

|                                                                                           | 3 Months Ended
        December 31
        (unaudited) | 12 Months Ended
        December 31
|------------------------------------------------------------------------------------------ | ------------------------------------------------------ | -----------------------------------
|($ millions, except per share amounts)                                                     | 2014                                                   | 2013                               
|Results from operating activities                                                          | 114                                                    | 191                                
|Share of profit from equity accounted investees(before tax, depreciation and amortization) | 2                                                      | 2                                  
|Depreciation and amortization                                                              | 65                                                     | 44                                 
|Unrealized gain on commodity-related derivative financial instruments                      | (11)                                                   | (2)                                
|EBITDA                                                                                     | 170                                                    | 235                                
|EBITDA per common share – basic (dollars)                                                  | 0.51                                                   | 0.75                               

Adjusted cash flow from operating activities

Adjusted cash flow from operating
activities is a non-GAAP measure which is defined as cash flow from operating activities plus the change in non-cash operating
working capital, adjusting for current tax and share-based payment expenses, and less preferred share dividends declared. Adjusted
cash flow from operating activities excludes preferred share dividends because they are not attributable to common shareholders.
The calculation has been modified to include current tax and share-based payment expense as it allows management to better assess
the obligations discussed below. Management believes that adjusted cash flow from operating activities provides comparable information
to investors for assessing financial performance during each reporting period.



35







Pembina
Pipeline Corporation



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)                                          | 2014                                                   | 2013                               
|Cash flow from operating activities                                             | 196                                                    | 208                                
|Add (deduct):                                                                   |                                                        |                                    
|Change in non-cash operating working capital                                    | (14)                                                   | 10                                 
|Current tax expenses                                                            | (28)                                                   | (19)                               
|Tax paid                                                                        | 11                                                     |                                    
|Accrued share-based payments                                                    | 9                                                      | (9)                                
|Share-based compensation payment                                                |                                                        |                                    
|Preferred share dividends declared                                              | (10)                                                   | (5)                                
|Adjusted cash flow from operating activities                                    | 164                                                    | 185                                
|Cash flow from operating activities per common share – basic (dollars)          | 0.58                                                   | 0.66                               
|Adjusted cash flow from operating activities per common share – basic (dollars) | 0.49                                                   | 0.59                               

Operating margin

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

Reconciliation of operating margin to gross profit:

|                                                                               | 3 Months Ended
        December 31
        (unaudited) | 12 Months Ended
        December 31
|------------------------------------------------------------------------------ | ------------------------------------------------------ | -----------------------------------
|($ millions)                                                                   | 2014                                                   | 2013                               
|Revenue                                                                        | 1,259                                                  | 1,282                              
|Cost of sales (excluding depreciation and amortization included in operations) |                                                        |                                    
|Operating expenses                                                             | 117                                                    | 101                                
|Cost of goods sold, including product purchases                                | 955                                                    | 903                                
|Realized gain (loss) on commodity-related derivative financial instruments     | 8                                                      | (3)                                
|Operating margin                                                               | 195                                                    | 275                                
|Depreciation and amortization included in operations                           | 62                                                     | 42                                 
|Unrealized gain on commodity-related derivative financial instruments          | 11                                                     | 2                                  
|Gross profit                                                                   | 144                                                    | 235                                

Total enterprise value

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



36









Pembina
Pipeline Corporation



Forward-Looking Statements &
Information

In the interest of providing
Pembina's securityholders and potential investors with information regarding Pembina, including management's assessment of the
Company's future plans and operations, certain statements contained in this MD&A constitute forward-looking statements or
information (collectively, "forward-looking statements") 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", "target", "view", "maintain",
"projection", "schedule", "objective", "strategy", "likely", "potential",
"outlook", "goal", "would", and similar expressions suggesting future events or future performance.

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

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



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

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

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

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

| | · | Pembina's
                                         strategy for payment of future abandonment costs;
| | - | ----------------------------------------------------------------------------------------------------

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

| | · | expected
                                         future cash flows, future contractual obligations, future financing options, availability
                                         of capital to fund growth plans, operating obligations and dividends and the use of proceeds
                                         from financings;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | expected
                                         contributions and expenses pertaining to Pembina's pension plans;
| | - | -------------------------------------------------------------------------------------------------------------------

| | · | anticipated
                                         impact of acquisitions on the Company's future cash flows, financial position and commercial
                                         opportunities;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

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 and the geographic region
                                         of such activity;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

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

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

| | · | future
                                         operating costs;
| | - | ----------------------------------------------------------------

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

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

| | · | in
                                         respect of 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;
| | - | ----------------------------------------------------------------

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

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

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

| | · | the
                                         regulatory environment and decisions;
| | - | ----------------------------------------------------------------------------------

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

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

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

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

| | · | non-performance
                                         or default by counterparties to agreements which Pembina or one or more of its 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, 2014. 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.



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