Document:

EX-4.9

 Exhibit 4.9 
  

 
 Unaudited Consolidated Financial Statements of 

VERESEN INC. 
 For the
three months ended March 31, 2017 and 2016 

 Veresen Inc. 

Consolidated Statement of Financial Position     
  

									
	 (Canadian $ Millions; number of shares in Millions, unaudited)
	  	March 31, 2017	 	 	December 31, 2016	 
	 Assets
	  				 			
	 Current assets
	  				 			
	 Cash and short-term investments
	  	 	163	 	 	 	108	 
	 Distributions receivable
	  	 	65	 	 	 	50	 
	 Accounts receivable and other
	  	 	29	 	 	 	27	 
	 Assets held for sale (note 3)
	  	 	779	 	 	 	780	 
		  	  
	  
	 	 	  
	  
	 
		  	 	1,036	 	 	 	965	 
	 Investments in jointly-controlled businesses (note 4)
	  	 	1,535	 	 	 	1,431	 
	 Investments held at cost (note 7)
	  	 	1,804	 	 	 	1,818	 
	 Pipeline, plant and other capital assets
	  	 	315	 	 	 	307	 
	 Intangible assets
	  	 	45	 	 	 	46	 
	 Due from jointly-controlled businesses
	  	 	3	 	 	 	3	 
	 Other assets
	  	 	2	 	 	 	2	 
		  	  
	  
	 	 	  
	  
	 
		  	 	4,740	 	 	 	4,572	 
		  	  
	  
	 	 	  
	  
	 
	 Liabilities
	  				 			
	 Current liabilities
	  				 			
	 Accounts payable and other
	  	 	57	 	 	 	73	 
	 Deferred revenue
	  	 	4	 	 	 	3	 
	 Dividends payable
	  	 	26	 	 	 	26	 
	 Current portion of long-term senior debt (note 5)
	  	 	4	 	 	 	304	 
	 Liabilities associated with assets held for sale (note 3)
	  	 	173	 	 	 	177	 
		  	  
	  
	 	 	  
	  
	 
		  	 	264	 	 	 	583	 
	 Long-term senior debt (note 5)
	  	 	1,425	 	 	 	903	 
	 Deferred tax liabilities
	  	 	223	 	 	 	209	 
	 Other long-term liabilities
	  	 	47	 	 	 	45	 
		  	  
	  
	 	 	  
	  
	 
		  	 	1,959	 	 	 	1,740	 
		  	  
	  
	 	 	  
	  
	 
	 Shareholders’ Equity
	  				 			
	 Share capital (note 6)
	  				 			
	 Preferred shares
	  	 	536	 	 	 	536	 
	 Common shares (314 and 314 outstanding at March 31, 2017 and December 31, 2016,
respectively)
	  	 	3,482	 	 	 	3,482	 
	 Additional paid-in capital
	  	 	28	 	 	 	28	 
	 Cumulative other comprehensive income
	  	 	262	 	 	 	281	 
	 Accumulated deficit
	  	 	(1,527	) 	 	 	(1,495	) 
		  	  
	  
	 	 	  
	  
	 
		  	 	2,781	 	 	 	2,832	 
		  	  
	  
	 	 	  
	  
	 
		  	 	4,740	 	 	 	4,572	 
		  	  
	  
	 	 	  
	  
	 

 Commitments and Contingencies (note 10) 

Variable Interest Entities (note 11) 
 See accompanying Notes to
the Consolidated Financial Statements 

  
 1 

 Veresen Inc.     

Consolidated Statement of Income     
  

									
	(Canadian $ Millions, except per Common Share	  	Three months ended March 31	 
	 amounts (note 6); unaudited)
	  	2017	 	 	2016	 
	 Equity income (note 4)
	  	 	59	 	 	 	50	 
	 Dividend income
	  	 	30	 	 	 	31	 
	 Operating revenues
	  	 	12	 	 	 	12	 
	 Operations and maintenance
	  	 	(5	) 	 	 	(5	) 
	 General and administrative
	  	 	(9	) 	 	 	(10	) 
	 Project development
	  	 	(16	) 	 	 	(40	) 
	 Depreciation and amortization
	  	 	(5	) 	 	 	(4	) 
	 Interest and other finance
	  	 	(12	) 	 	 	(9	) 
		  	  
	  
	 	 	  
	  
	 
	 Net income before tax
	  	 	54	 	 	 	25	 
	 Current tax
	  	 	(3	) 	 	 	(2	) 
	 Deferred tax
	  	 	(10	) 	 	 	(7	) 
		  	  
	  
	 	 	  
	  
	 
	 Net income from continuing operations
	  	 	41	 	 	 	16	 
	 Discontinued operations (note 3)
	  				 			
	 Net income (loss) from discontinued operations before tax
	  	 	16	 	 	 	(3	) 
	 Income tax on discontinued operations
	  	 	(4	) 	 	 	—  	 
		  	  
	  
	 	 	  
	  
	 
	 Discontinued operations income (loss)
	  	 	12	 	 	 	(3	) 
		  	  
	  
	 	 	  
	  
	 
	 Net income
	  	 	53	 	 	 	13	 
	 Preferred Share dividends
	  	 	(6	) 	 	 	(6	) 
		  	  
	  
	 	 	  
	  
	 
	 Net income attributable to Common Shares
	  	 	47	 	 	 	7	 
		  	  
	  
	 	 	  
	  
	 
	 Continuing operations
	  	 	0.11	 	 	 	0.03	 
	 Discontinued operations
	  	 	0.04	 	 	 	(0.01	) 
		  	  
	  
	 	 	  
	  
	 
	 Net income per Common Share
	  	 	0.15	 	 	 	0.02	 
		  	  
	  
	 	 	  
	  
	 
	 See accompanying Notes to the Consolidated Financial Statements
	  				 			
			
	 Consolidated Statement of Comprehensive Income (Loss)
	  				 			
	 	  	Three months ended March 31	 
	 (Canadian $ Millions, unaudited)
	  	2017	 	 	2016	 
	 Net income
	  	 	53	 	 	 	13	 
	 Other comprehensive loss
	  				 			
	 Unrealized foreign exchange loss on translation
	  	 	(19	) 	 	 	(164	) 
		  	  
	  
	 	 	  
	  
	 
	 Other comprehensive loss
	  	 	(19	) 	 	 	(164	) 
		  	  
	  
	 	 	  
	  
	 
	 Comprehensive income (loss)
	  	 	34	 	 	 	(151	) 
	 Preferred Share dividends
	  	 	(6	) 	 	 	(6	) 
		  	  
	  
	 	 	  
	  
	 
	 Comprehensive income (loss) attributable to Common Shares
	  	 	28	 	 	 	(157	) 
		  	  
	  
	 	 	  
	  
	 

 See accompanying Notes to the Consolidated Financial Statements 

  
 2 

 Veresen Inc.     

Consolidated Statement of Cash Flows     
  

									
	 	  	Three months ended March 31	 
	 (Canadian $ Millions, unaudited)
	  	2017	 	 	2016	 
	 Operating
	  				 			
	 Net income
	  	 	53	 	 	 	13	 
	 Net loss (income) from discontinued operations
	  	 	(12	) 	 	 	3	 
	 Equity income (note 4 and 8)
	  	 	(59	) 	 	 	(50	) 
	 Distributions from jointly-controlled businesses
	  	 	68	 	 	 	65	 
	 Depreciation and amortization
	  	 	5	 	 	 	4	 
	 Foreign exchange and other non-cash items
	  	 	2	 	 	 	—  	 
	 Deferred tax
	  	 	10	 	 	 	7	 
	 Changes in non-cash working capital (note 9)
	  	 	(11	) 	 	 	(8	) 
		  	  
	  
	 	 	  
	  
	 
	 Cash provided by continuing operations
	  	 	56	 	 	 	34	 
	 Cash provided by discontinued operations
	  	 	15	 	 	 	14	 
		  	  
	  
	 	 	  
	  
	 
		  	 	71	 	 	 	48	 
		  	  
	  
	 	 	  
	  
	 
	 Investing
	  				 			
	 Investments in jointly-controlled businesses
	  	 	(138	) 	 	 	(136	) 
	 Return of capital from jointly-controlled businesses
	  	 	5	 	 	 	—  	 
	 Pipeline, plant and other capital assets
	  	 	(19	) 	 	 	(6	) 
		  	  
	  
	 	 	  
	  
	 
	 Cash used by continuing operations
	  	 	(152	) 	 	 	(142	) 
	 Cash provided (used) by discontinued operations
	  	 	1	 	 	 	(1	) 
		  	  
	  
	 	 	  
	  
	 
		  	 	(151	) 	 	 	(143	) 
		  	  
	  
	 	 	  
	  
	 
	 Financing
	  				 			
	 Long-term debt repaid (note 5)
	  	 	(300	) 	 	 	—  	 
	 Net change in credit facilities (note 5)
	  	 	521	 	 	 	132	 
	 Common Share dividends paid
	  	 	(79	) 	 	 	(30	) 
	 Preferred Share dividends paid
	  	 	(6	) 	 	 	(6	) 
		  	  
	  
	 	 	  
	  
	 
	 Cash provided by continuing operations
	  	 	136	 	 	 	96	 
	 Cash used by discontinued operations
	  	 	(2	) 	 	 	(2	) 
		  	  
	  
	 	 	  
	  
	 
		  	 	134	 	 	 	94	 
		  	  
	  
	 	 	  
	  
	 
	 Increase (decrease) in cash and short-term investments
	  	 	54	 	 	 	(1	) 
	 Effect of foreign exchange rate changes on cash and short-term investments
	  	 	(1	) 	 	 	(3	) 
	 Cash and short-term investments at the beginning of the period - continuing operations
	  	 	108	 	 	 	41	 
	 Cash and short-term investments at the beginning of the period - discontinued operations (note
3)
	  	 	30	 	 	 	17	 
		  	  
	  
	 	 	  
	  
	 
	 Cash and short-term investments at the end of the period
	  	 	191	 	 	 	54	 
	 Cash and short-term investments - discontinued operations (note 3)
	  	 	(28	) 	 	 	(27	) 
		  	  
	  
	 	 	  
	  
	 
	 Cash and short-term investments - continuing operations
	  	 	163	 	 	 	27	 
		  	  
	  
	 	 	  
	  
	 

 See accompanying Notes to the Consolidated Financial Statements 

  
 3 

 Veresen Inc. 

Consolidated Statement of Shareholders’ Equity 
  

									
	 	  	Three months ended March 31	 
	 (Canadian $ Millions, unaudited)
	  	2017	 	 	2016	 
	 Preferred Shares
	  				 			
	 Balance at the beginning and end of the period
	  	 	536	 	 	 	536	 
		  	  
	  
	 	 	  
	  
	 
	 Common Shares
	  				 			
	 January 1
	  	 	3,482	 	 	 	3,354	 
	 Common Shares issued under Premium Dividend and Dividend Reinvestment Plan
(“DRIP”)
	  	 	—  	 	 	 	45	 
		  	  
	  
	 	 	  
	  
	 
	 Balance at the end of the period
	  	 	3,482	 	 	 	3,399	 
		  	  
	  
	 	 	  
	  
	 
	 Additional paid-in capital
	  				 			
	 Balance at the beginning and end of the period
	  	 	28	 	 	 	4	 
		  	  
	  
	 	 	  
	  
	 
	 Cumulative other comprehensive income
	  				 			
	 January 1
	  	 	281	 	 	 	359	 
	 Other comprehensive loss
	  	 	(19	) 	 	 	(164	) 
		  	  
	  
	 	 	  
	  
	 
	 Balance at the end of the period
	  	 	262	 	 	 	195	 
		  	  
	  
	 	 	  
	  
	 
	 Accumulated deficit
	  				 			
	 January 1
	  	 	(1,495	) 	 	 	(1,166	) 
	 Net income
	  	 	53	 	 	 	13	 
	 Preferred Share dividends
	  	 	(6	) 	 	 	(6	) 
	 Common Share dividends
	  	 	(79	) 	 	 	(76	) 
		  	  
	  
	 	 	  
	  
	 
	 Balance at the end of the period
	  	 	(1,527	) 	 	 	(1,235	) 
		  	  
	  
	 	 	  
	  
	 
	 Shareholders’ Equity
	  	 	2,781	 	 	 	2,899	 
		  	  
	  
	 	 	  
	  
	 

 See accompanying Notes to the Consolidated Financial Statements 

  
 4 

 Notes to the Consolidated Financial Statements 

Three months ended March 31, 2017 and 2016 
 (Canadian $
Millions, except where noted, unaudited) 
  

	1.	Basis of Presentation 

 These consolidated financial statements of Veresen Inc. have been prepared by
management in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). 
 Amounts are stated in
millions of Canadian dollars unless otherwise indicated. 
 The preparation of financial statements in accordance with US GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, financial instruments and taxes. Actual amounts could differ from these estimates. Significant estimates used in the preparation of these
consolidated financial statements relate to the determination of any impairment in the carrying value of long-term assets, the estimated useful lives over which certain assets are depreciated or amortized, and the measurement of asset retirement
obligations, and contingencies. 
 These consolidated financial statements include the accounts of the Company and its subsidiaries. The Company
consolidates its interest in entities over which it is able to exercise control. To the extent there are interests owned by other parties, the other parties’ interests are included in Non-Controlling
Interest. Veresen accounts for its jointly-controlled businesses using the equity method, and its investment in Ruby Pipeline Holding Company LLC (“Ruby”) using the cost method. 

Other than as described in note 2, the accounting policies applied are consistent with those outlined in Veresen’s annual audited consolidated financial
statements for the year ended December 31, 2016. The year-end balance sheet data was derived from audited financial statements but these interim financial statements do not include all disclosures
required by US GAAP and should be read in conjunction with the December 31, 2016 audited consolidated financial statements. Operating results for the three months ended March 31, 2017 and March 31, 2016 are not necessarily
indicative of the results for the full year. 
 In management’s opinion the interim consolidated financial statements contain all adjustments,
consisting only of normal recurring adjustments, which management considers necessary to present fairly the Company’s financial position as at March 31, 2017 and results of operations and cash flows for the three months ended
March 31, 2017 and 2016. 
  

	2.	New Accounting Pronouncements 

 Adoption of New Standards 

The following new Accounting Standards Updates (“ASU”) have been issued by the Financial Accounting Standards Board (“FASB”), as of
March 31, 2017: 
 Effective January 1, 2017, the Company adopted ASU 2015-017, “Income Taxes:
Balance Sheet Classification of Deferred Taxes”. This ASU changes the classification of deferred tax liabilities and assets. Under the ASU, an entity classifies deferred tax liabilities and assets as
non-current in the statement of financial position. This guidance was applied retrospectively and did not have a material impact to the Company. 

  
 5 

 Effective January 1, 2017, the Company adopted ASU 2016-07,
“Investments—Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting”. This ASU eliminates the requirement for an investor to adjust the investment, results of operations, and retained
earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held, in the event
that an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence. This guidance was applied prospectively and is not expected to have a material impact to the Company.

 Future accounting policy changes 
 In May 2014, the
FASB issued ASU 2014-09, “Revenue from Contracts with Customers”. This ASU provides guidance for changes in criteria for revenue recognition from contracts with customers. Additionally, in
April 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing” which provides guidance on identifying performance
obligations and licensing. Further in May 2016, the FASB issued ASU 2016-12, “Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients” which provides guidance
to address certain issues assessing collectibility, presentation of sales taxes, non cash consideration and completed contracts and contract modifications at transition. In August 2015, the FASB issued ASU
2015-14, “Revenue from Contracts with Customers—Deferral of the effective date”. This ASU defers the effective date of ASU 2014-09 for all entities
by one year. In December 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements to Revenues from Contracts with Customers under Topic 606” which provides amendments to
clarify and correct unintended application of the guidance. All guidance is effective for annual and interim periods beginning after December 15, 2017, and will be applied retrospectively. The Company is currently evaluating the impact of the
standard. 
 In January 2016, the FASB issued ASU 2016-01, “Financial Instruments—Overall: Recognition
and Measurement of Financial Assets and Liabilities”. This ASU addresses certain aspects of the guidance regarding recognition, measurement, presentation and disclosure of financial instruments, specifically the guidance for measuring the
fair value of equity investments. This guidance is effective for annual and interim periods beginning after December 15, 2017, and will be applied by means of a cumulative-effect adjustment to the Statement of Financial Position as of the
beginning of the fiscal year of adoption, with amendments related to equity securities without readily determinable fair values to be applied prospectively. The Company does not expect the standard to have a material impact. 

In February 2016, the FASB issued ASU 2016-02, “Leases”. This ASU addresses the recognition,
measurement, presentation and disclosure in the financial statements of the assets and liabilities related to operating leases. This guidance is effective for annual and interim periods beginning after December 15, 2018. The Company is
currently evaluating the impact of the standard. 
 In June 2016, the FASB issued ASU 2016-13, “Financial
Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments”. This ASU replaces the incurred loss impairment methodology in current guidance with a methodology that reflects expected credit losses and requires
consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This guidance is effective for annual and interim periods beginning after December 15, 2019. Entities will apply the guidance through a
cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (a modified-retrospective approach). The Company is currently evaluating the impact of the standard. 

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows: Classification of Certain Cash Receipts
and Cash Payments”. This ASU is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. This guidance is effective for annual and interim periods beginning after December 15,
2017. Entities will apply the guidance retrospectively to all periods presented but may apply it prospectively from the earliest date practicable if retrospective application would be impracticable. The Company is currently evaluating the impact of
the standard. 

  
 6 

 In November 2016, the FASB issued ASU 2016-18, “Statement of Cash
Flows: Restricted Cash”. This ASU is intended to reduce diversity that exists in the classification and presentation of changes in restricted cash on the statement of cash flows under Topic 230. This guidance is effective for annual and
interim periods beginning after December 15, 2017. Entities will apply the guidance retrospectively to all periods presented. The Company does not expect the standard to have a material impact. 

In January 2017, the FASB issued ASU 2017-01, “Business Combinations: Clarifying the Definition of a
Business”. This ASU is intended to clarify the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance is effective for
annual and interim periods beginning after December 15, 2017. Entities will apply the guidance prospectively on or after the effective date. The Company is currently evaluating the impact of the standard. 

In January 2017, the FASB issued ASU 2017-04, “Intangibles—Goodwill and Other : Simplifying the Test for
Goodwill Impairment”. This ASU is intended to simplify the subsequent measurement of goodwill by comparing the fair value of a reporting unit with its carrying amount. This guidance is effective for annual and interim periods beginning
after December 15, 2019. Entities will apply the guidance prospectively. The Company does not expect the standard to have a material impact. 
  

	3.	Assets Held for Sale, Discontinued Operations, and Disposals 

 Assets Held for Sale 

On February 21, 2017, the Company announced it had reached agreement with three third parties to sell its power generation facilities for
$1.18 billion, including project level financing. As a result, the assets and liabilities of the facilities have been classified as held for sale on the consolidated statement of financial position as at March 31, 2017 and the results of
operations and cash flows have been presented as discontinued operations on the consolidated statement of income and consolidated statement of cash flows, respectively, with comparatives. The assets and liabilities held for sale were remeasured to
reflect our assessment of fair value as a result of the sale which resulted in an additional depreciation charge of $26 million to the Company’s district energy assets, recognized in the fourth quarter of 2016 as part of discontinued
operations. In the first quarter of 2017, an additional $3 million of depreciation charges were recognized as a result of interim purchase price adjustments. 

On August 1, 2016, the Company closed the sale of its 33 megawatt Glen Park
run-of-river hydro power generation facility to an unrelated third party for proceeds of $81 million which approximated the carrying value of the assets sold. As a
result, results of operations and cash flows have been presented as discontinued operations on the consolidated statement of income and consolidated statement of cash flows for the three months ended March 31, 2016. 

  
 7 

 The table below details the assets and liabilities held for sale: 

 

									
	 	  	March 31, 2017	 	  	December 31, 2016	 
	 Assets
	  				  			
	 Cash
	  	 	28	 	  	 	30	 
	 Restricted cash
	  	 	3	 	  	 	3	 
	 Distributions receivable
	  	 	2	 	  	 	2	 
	 Receivables and other
	  	 	18	 	  	 	20	 
	 Property, plant and equipment
	  	 	584	 	  	 	583	 
	 Intangible assets
	  	 	102	 	  	 	102	 
	 Investments in jointly-controlled businesses
	  	 	38	 	  	 	36	 
	 Other assets
	  	 	4	 	  	 	4	 
		  	  
	  
	 	  	  
	  
	 
	 Assets held for sale
	  	 	779	 	  	 	780	 
		  	  
	  
	 	  	  
	  
	 
	 Liabilities
	  				  			
	 Payables
	  	 	7	 	  	 	11	 
	 Current portion of long-term senior debt
	  	 	9	 	  	 	9	 
	 Long-term senior debt
	  	 	149	 	  	 	151	 
	 Deferred tax liabilities
	  	 	3	 	  	 	2	 
	 Other liabilities
	  	 	5	 	  	 	4	 
		  	  
	  
	 	  	  
	  
	 
	 Liabilities held for sale
	  	 	173	 	  	 	177	 
		  	  
	  
	 	  	  
	  
	 

 The table below provides details on the results of the discontinued operations: 

 

									
	 	  	Three months ended March 31	 
	  	2017	 	  	2016	 
	 Equity income (loss)
	  	 	9	 	  	 	(3	) 
	 Operating revenues
	  	 	26	 	  	 	25	 
	 Operations and maintenance
	  	 	(10	) 	  	 	(10	) 
	 General and administrative
	  	 	(3	) 	  	 	(3	) 
	 Depreciation and amortization
	  	 	(3	) 	  	 	(9	) 
	 Interest and other finance
	  	 	(3	) 	  	 	(3	) 
		  	  
	  
	 	  	  
	  
	 
	 Net income (loss) from discontinued operations before tax
	  	 	16	 	  	 	(3	) 
	 Income tax on discontinued operations
	  	 	(4	) 	  	 	—  	 
		  	  
	  
	 	  	  
	  
	 
	 Discontinued operations income (loss)
	  	 	12	 	  	 	(3	) 
		  	  
	  
	 	  	  
	  
	 

  
 8 

	4.	Investments in Jointly-Controlled Businesses 

 Condensed financial information (100%) for the
Company’s jointly-controlled businesses: 
  

																																													
	 	 	As at March 31, 2017	 	 	Three months ended
March 31, 2017	 	 	 	 	 	As at March 31,
2017	 	 	Three
months
ended
March 31,
2017	 
	 100%
	 	Current
Assets	 	 	Non-
Current
Assets	 	 	Current
Liabilities(1)	 	 	Non-Current
Liabilities(1)	 	 	Senior
Debt	 	 	Revenues	 	 	Expenses	 	 	Profit
(Loss)
before
Tax	 	 	Owner-
ship (%)	 	 	Equity
Investment	 	 	Equity
Income
(Loss)	 
	 Alliance Canada (2) (7)
	 	 	226	 	 	 	1,217	 	 	 	51	 	 	 	56	 	 	 	893	 	 	 	174	 	 	 	111	 	 	 	63	 	 	 	50	 	 	 	229	 	 	 	29	 
	 Alliance U.S. (3) (6)
	 	 	96	 	 	 	1,114	 	 	 	53	 	 	 	15	 	 	 	574	 	 	 	117	 	 	 	64	 	 	 	53	 	 	 	50	 	 	 	233	 	 	 	27	 
	 Aux Sable Canada
	 	 	51	 	 	 	110	 	 	 	48	 	 	 	18	 	 	 	4	 	 	 	118	 	 	 	115	 	 	 	3	 	 	 	50	 	 	 	46	 	 	 	1	 
	 ASLP (4) (6)
	 	 	54	 	 	 	554	 	 	 	73	 	 	 	111	 	 	 	7	 	 	 	31	 	 	 	40	 	 	 	(9	) 	 	 	43	 	 	 	145	 	 	 	(3	) 
	 ASM (6)
	 	 	27	 	 	 	298	 	 	 	18	 	 	 	—  	 	 	 	—  	 	 	 	80	 	 	 	71	 	 	 	9	 	 	 	43	 	 	 	129	 	 	 	4	 
	 ACM
	 	 	8	 	 	 	—  	 	 	 	8	 	 	 	—  	 	 	 	—  	 	 	 	29	 	 	 	24	 	 	 	5	 	 	 	43	 	 	 	—  	 	 	 	2	 
	 Veresen Midstream (5)
	 	 	335	 	 	 	3,474	 	 	 	315	 	 	 	26	 	 	 	1,787	 	 	 	64	 	 	 	65	 	 	 	(1	) 	 	 	47	 	 	 	753	 	 	 	(1	) 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Continuing Investments in Jointly-Controlled Businesses
	  
	 				 				 	 	1,535	 	 	 	59	 
			 				 				 				 				 				 				 	  
	  
	 	 	  
	  
	 
	 York Energy Centre (8) (note 12)
	 	 	17	 	 	 	246	 	 	 	12	 	 	 	44	 	 	 	234	 	 	 	17	 	 	 	12	 	 	 	5	 	 	 	50	 	 	 	26	 	 	 	5	 
	 Grand Valley
	 	 	8	 	 	 	164	 	 	 	1	 	 	 	4	 	 	 	152	 	 	 	9	 	 	 	11	 	 	 	(2	) 	 	 	75	 	 	 	12	 	 	 	4	 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Assets Held for Sale, Investments in Jointly-Controlled Businesses (note
3)
	  
	 				 	 	38	 	 	 	9	 
			 				 				 				 				 				 	  
	  
	 	 	  
	  
	 

  

																																													
	 	 	As at December 31, 2016	 	 	Three months ended
March 31, 2016	 	 	 	 	 	As at December 31,
2016	 	 	Three
months
ended
March 31,
2016	 
	 100%
	 	Current
Assets	 	 	Non-
Current
Assets	 	 	Current
Liabilities (1)	 	 	Non-Current
Liabilities (1)	 	 	Senior
Debt	 	 	Revenues	 	 	Expenses	 	 	Profit
(Loss)
before
tax	 	 	Owner-
ship
(%)	 	 	Equity Investment	 	 	Equity
Income
(Loss)	 
	 Alliance
Canada (2) (7)
	 	 	193	 	 	 	1,237	 	 	 	58	 	 	 	50	 	 	 	898	 	 	 	135	 	 	 	80	 	 	 	55	 	 	 	50	 	 	 	231	 	 	 	26	 
	 Alliance U.S. (3) (6)
	 	 	75	 	 	 	1,140	 	 	 	59	 	 	 	19	 	 	 	564	 	 	 	111	 	 	 	61	 	 	 	50	 	 	 	50	 	 	 	240	 	 	 	25	 
	 Aux Sable Canada
	 	 	58	 	 	 	117	 	 	 	57	 	 	 	24	 	 	 	5	 	 	 	93	 	 	 	93	 	 	 	—  	 	 	 	50	 	 	 	44	 	 	 	—  	 
	 ASLP (4) (6)
	 	 	56	 	 	 	556	 	 	 	62	 	 	 	105	 	 	 	8	 	 	 	34	 	 	 	39	 	 	 	(5	) 	 	 	43	 	 	 	155	 	 	 	(1	) 
	 ASM (6)
	 	 	32	 	 	 	303	 	 	 	25	 	 	 	1	 	 	 	—  	 	 	 	54	 	 	 	53	 	 	 	1	 	 	 	43	 	 	 	131	 	 	 	—  	 
	 ACM
	 	 	20	 	 	 	—  	 	 	 	26	 	 	 	—  	 	 	 	—  	 	 	 	21	 	 	 	25	 	 	 	(4	) 	 	 	43	 	 	 	(2	) 	 	 	(1	) 
	 Veresen
Midstream (5)
	 	 	145	 	 	 	3,207	 	 	 	287	 	 	 	19	 	 	 	1,629	 	 	 	62	 	 	 	54	 	 	 	8	 	 	 	47	 	 	 	632	 	 	 	4	 
	 Other (6)
	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	4	 	 	 	8	 	 	 	(4	) 	 	 	50	 	 	 	—  	 	 	 	(3	) 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Continuing Investments in Jointly-Controlled Businesses
	  
	 				 				 	 	1,431	 	 	 	50	 
			 				 				 				 				 				 				 	  
	  
	 	 	  
	  
	 
	 York Energy Centre (8) (note 12)
	 	 	15	 	 	 	251	 	 	 	15	 	 	 	44	 	 	 	236	 	 	 	15	 	 	 	19	 	 	 	(4	) 	 	 	50	 	 	 	23	 	 	 	(2	) 
	 Grand Valley
	 	 	7	 	 	 	165	 	 	 	2	 	 	 	5	 	 	 	154	 	 	 	8	 	 	 	9	 	 	 	(1	) 	 	 	75	 	 	 	13	 	 	 	(1	) 
		 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Assets Held for Sale, Investments in Jointly-Controlled Businesses (note
3)
	  
	 				 	 	36	 	 	 	(3	) 
			 				 				 				 				 				 	  
	  
	 	 	  
	  
	 

 Upon acquisition of investments accounted for under the equity method, the Company prepared purchase price allocations of the
purchase price to the assets and liabilities of the underlying investee and adjusts equity method earnings for the amortization of purchase price adjustments allocated to depreciable assets. 

 

	(1)	Current liabilities and non-current liabilities exclude senior debt. 

	(2)	At March 31, 2017, the Company had a $42 million (December 31, 2016 - $44 million) increase in the carrying value of Alliance Canada compared to the underlying equity in the net assets primarily resulting from
the purchase price discrepancy as part of the acquisitions in 1997, 2002, and 2003 resulting in 50% ownership. 

	(3)	At March 31, 2017, the Company had a US$12 million (December 31, 2016 - US$ 13 million) decrease in the carrying value of Alliance U.S. compared to the underlying equity in the net assets primarily resulting
from the purchase price discrepancy as part of the acquisitions in 1997, 2002, and 2003 resulting in 50% ownership. 

	(4)	At March 31, 2017, the Company had a US$25 million (December 31, 2016 - US$ 26 million) decrease in the carrying value of ASLP compared to the underlying equity in the net assets primarily resulting from the
purchase price discrepancy as part of the acquisitions in 1997, 2002, and 2003 resulting in 42.7% ownership. 

	(5)	At March 31, 2017, the Company had a $33 million (December 31, 2016 - $35 million) decrease in the carrying value of Veresen Midstream compared to the underlying equity in the net assets primarily resulting
from the unrecognized gain on sale relating to the non-monetary portion of the Veresen Midstream transaction, which, on the date of acquisition, March 31, 2015, resulted in 50% ownership. As at March 31, 2017, Veresen’s ownership
decreased to 47.0%. 

  
 9 

	(6)	Assets and liabilities of these investments have been translated into Canadian dollars using the exchange rate in effect at the balance sheet date and revenues and expenses have been translated into Canadian dollars at
average exchange rates during the period. 

	(7)	Includes NRGreen, which is not being sold with the power business and has therefore been retrospectively reclassified with Alliance Canada. 

	(8)	At March 31, 2017, the Company had a $38 million (December 31, 2016 - $38 million) increase in the carrying value of York Energy Centre compared to the underlying equity in the net assets primarily resulting
from the purchase price discrepancy as part of the acquisition in 2010 resulting in 50% ownership. Expenses include unrealized gains or losses on the interest rate hedge (note 7). 

 

	5.	Long-term Debt 

 On March 10, 2017, the Corporation repaid its $300 million 3.95% medium term
notes, which were scheduled to mature on March 14, 2017. 
 Revolving Credit Facilities 

On October 31, 2016, the $750 million Revolving Credit Facility term was extended by one year to mature on May 31, 2020. Outstanding advances
bear interest based on various quoted floating rates plus a margin. At March 31, 2017, the Facility was drawn by $606 million (December 31, 2016 - $85 million). 

Club Revolving Credit Agreement 
 On October 31,
2016, the $45 million Club Revolving Credit Agreement term was extended by one year to mature on May 31, 2020. Outstanding advances bear interest on various quoted floating rate plus a margin. At March 31, 2017, $13 million in
letters of credit were issued and outstanding. 
  

	6.	Share Capital 

 Common Shares 

On March 31, 2017, 23,926 shares were issued to settle a portion of the long-term incentive plan obligation that vested at the end of 2016. The weighted
average number of Common Shares outstanding used to determine net income per Common Share on a basic and diluted basis for the three months ended March 31, 2017 was 313,628,855 (2016 - 301,513,067). 

Premium Dividend and Dividend Reinvestment Plan 
 On
August 3, 2016 the Company suspended the Premium Dividend and Dividend Reinvestment Plan (“DRIP”) commencing with the August 2016 dividend. The DRIP allowed eligible shareholders to elect to reinvest the eligible portion of the
dividend declared by the Company in additional Common Shares at a 5% discount to the average market price or to receive the dividend in cash plus a 2% premium cash payment based on the eligible portion of the dividend. 

  
 10 

	7.	Financial Instruments and Risk Management 

 Fair Values 

Fair value is the amount of consideration that would be agreed upon in an arm’s length transaction between knowledgeable, willing parties who are under no
compulsion to act. 
 The fair values of financial instruments included in cash and short-term investments, distributions receivable, receivables, due from
jointly-controlled businesses, other assets, payables, dividends payable, and other long-term liabilities approximate their carrying amounts due to the nature of the item and/or the short time to maturity. The fair value of the investment held at
cost is based on a number of factors, including the present value of anticipated distributable cash flows to be produced from the underlying operations of the Ruby investment. Assessing these cash flows required the use of assumptions related to the
future demand for Ruby’s operations, forecasted commodity prices and interest rates, anticipated economic conditions, timing of conversion of the preferred interest into a common equity interest, and other inputs, many of which are not
available as observable market data. The fair values of senior debt are calculated by discounting future cash flows using discount rates estimated based on government bond rates plus expected spreads for similarly-rated instruments with comparable
risk profiles. 
 The carrying value of investments held at cost are accounted for under the cost method. As part of the Company’s impairment review,
the Company performs a fair value assessment of the Company’s investments held at cost on an annual basis using the most currently available information. 

US GAAP establishes a fair value hierarchy that distinguishes between fair values developed based on market data obtained from sources independent of the
reporting entity, and fair values developed using the reporting entity’s own assumptions based on the best information available in the circumstances. The levels of the fair value hierarchy are: 

Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. 

Level 2: Inputs are other than the quoted prices included in Level 1 that are observable for the asset or liability,
either directly or indirectly. 
 Level 3: Inputs are not based on observable market data. 

Veresen has categorized senior debt as Level 2. At March 31, 2017 senior debt had a carrying value of $1,429 million (December 31, 2016 -
$1,207 million) and fair value of $1,460 million (December 31, 2016 - $1,236 million). The investment held at cost is categorized as Level 3. At March 31, 2017 the investment held at cost had a carrying value of
$1,804 million (December 31, 2016 - $1,818 million) and a fair value of $1,840 million (December 31, 2016 - $1,818 million). The investment held at cost is denominated in US dollars and fluctuations in exchange rates will result
in changes to its carrying value. 
 Financial instruments measured at fair value as at March 31, 2017 were: 

 

																	
	 	  	Level 1	 	  	Level 2	 	  	Level 3	 	  	Total	 
	 Cash and short-term investments
	  				  	 	163	 	  				  	 	163	 
	 Investments held at cost
	  				  				  	 	1,804	 	  	 	1,804	 

  
 11 

 Cross Currency Swaps 

As at March 31, 2017, Veresen Midstream, a jointly-controlled business, had two cross currency swaps (“Swaps”). These Swaps were entered
into to manage the exposure to changes in interest rates and foreign exchange whereby Veresen Midstream receives variable interest rates denominated in US dollars and pays fixed interest rates denominated in Canadian dollars. The first Swap,
obtained on March 31, 2015, had an initial notional amount of US$575 million (100%) which declines over the 4-year swap facility, ending March 31, 2019. On May 28, 2015, the Swap was
amended as a result of the re-pricing of Veresen Midstream’s US dollar denominated Term Loan, to reflect the reduction of 75 basis points. The second Swap, obtained on September 6, 2016, had an
initial notional amount of US$150 million (100%) which declines over the remaining term of the swap facility, ending March 31, 2019. 
 During the
first quarter of 2017, $48 million (100%) of the derivative financial instrument was monetized by amending the exchange rate on the final bullet payment on the existing Swaps to the current market rate, resulting in Veresen Midstream receiving
$48 million (100%) in cash and resetting the fair value of the Swaps. 
 Future changes in interest rates and exchange rates will affect the fair value
of the Swaps, impacting the amount of unrealized gains or losses included in equity income from jointly-controlled businesses recognized in the period. On February 17, 2017, Veresen Midstream successfully
re-priced its US denominated Term Loan B, resulting in a reduction of 75 basis points. 
 The following is a summary
of the Swaps in place as at March 31, 2017: 
  

																	
	 Jointly-Controlled
Business
	  	 Variable Debt Interest Rate
	  	Fixed
Rate	 	 	Notional
Amount (1)	 	  	Fair
Value (1)	 	 	Term
	 Veresen Midstream
	  	USD-BA-LIBOR	  	 	5.81	% 	 	$	360	 	  	$	(3	) 	 	March 31, 2015 to March 31,
2019
	 Veresen Midstream
	  	USD-BA-LIBOR	  	 	5.49	% 	 	$	94	 	  	 	—  	 	 	September 6, 2016 to March 31,
2019

 The following is a summary of the Swaps in place as at December 31, 2016: 

 

																	
	 Jointly-Controlled
Business
	  	 Variable Debt Interest Rate
	  	Fixed
Rate	 	 	Notional
Amount (1)	 	  	Fair
Value (1)	 	  	Term
	 Veresen Midstream
	  	USD-BA-LIBOR	  	 	5.81	% 	 	$	364	 	  	$	23	 	  	March 31, 2015 to March 31,
2019
	 Veresen Midstream
	  	USD-BA-LIBOR	  	 	5.49	% 	 	$	95	 	  	$	2	 	  	September 6, 2016 to March 31,
2019

  

	(1)	Veresen’s interest in Veresen Midstream varies for items recognized within the consolidated statement of financial position and the consolidated statement of income. For the purposes of recognizing items in the
consolidated statement of financial position, Veresen’s ownership interest is based on Veresen’s holdings on a fully diluted basis, as at the date of the consolidated statement of financial position. As at March 31, 2017, this
ownership interest is 47.0%. For the purposes of recognizing items in the consolidated statement of income, Veresen’s ownership interest is based on the weighted average of Veresen’s holdings on a fully diluted basis during the financial
statement period. For the period ended March 31, 2017 and December 31, 2016 this ownership interest is 47.2% and 47.4%, respectively. 

The fair values approximate the amount that Veresen Midstream would have either paid or received to settle the contract, and are included in the
Company’s investment in Veresen Midstream. 
 Interest Rate Hedges 

Veresen and its jointly-controlled businesses periodically enter into interest rate hedges to manage interest rate exposures. As at March 31, 2017, York
Energy Centre and Grand Valley, all being jointly-controlled businesses within the Company’s discontinued operations, had interest rate hedges. Future changes in interest rates will affect the fair value of the hedges, impacting the amount of
unrealized gains or losses included in net income or loss from discontinued operations. 

  
 12 

 The following is a summary of the interest rate hedges in place as at March 31, 2017: 

 

																	
	 Jointly-Controlled
Business
	  	 Variable Debt Interest Rate
	  	Fixed Rate	 	 	Notional
Amount (1)	 	  	Fair
Value (1)	 	 	Term
	 York Energy Centre
	  	CAD-BA-CDOR	  	 	4.36	% 	 	$	117	 	  	$	(22	) 	 	April 30, 2012 to June 30,
 2032

	 Grand Valley 1
	  	CAD-BA-CDOR	  	 	1.52	% 	 	$	36	 	  	$	1	 	 	July 28, 2016 to September 30, 2031
	 Grand Valley 2
	  	CAD-BA-CDOR	  	 	2.31	% 	 	$	82	 	  	$	(2	) 	 	December 31, 2015 to December 31,
2033

  
 13 

 The following is a summary of the interest rate hedge in place as at December 31, 2016: 

 

																	
	 Jointly-Controlled
Business
	  	 Variable Debt Interest Rate
	  	Fixed Rate	 	 	Notional
Amount (1)	 	  	Fair
Value (1)	 	 	Term
	 York Energy Centre
	  	CAD-BA-CDOR	  	 	4.36	% 	 	$	118	 	  	$	(22	) 	 	April 30, 2012 to June 30,
 2032

	 Grand Valley 1
	  	CAD-BA-CDOR	  	 	1.52	% 	 	$	37	 	  	$	(1	) 	 	July 28, 2016 to September 30,
2031
	 Grand Valley 2
	  	CAD-BA-CDOR	  	 	2.31	% 	 	$	83	 	  	$	(1	) 	 	December 31, 2015 to
 December 31, 2033

  

	(1)	Veresen’s interest in the York Energy Centre, Grand Valley 1, and Grand Valley 2 jointly-controlled businesses is 50%, 75%, and 75%, respectively. 

The fair values approximate the amount that York Energy Centre and Grand Valley would have either paid or received to settle the contract, and are included in
the Company’s investments in York Energy Centre and Grand Valley, as assets held for sale. 
  

	8.	Segmented Information 

  

																																									
	 	  	Pipelines (1)	 	 	Midstream	 	  	Power	 	 	Corporate(2)	 	 	Total	 
	 Three months ended March 31
	  	2017	 	 	2016	 	 	2017	 	  	2016	 	  	2017	 	 	2016	 	 	2017	 	 	2016	 	 	2017	 	 	2016	 
	 Equity income (loss)
	  	 	56	 	 	 	51	 	 	 	3	 	  	 	2	 	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(3	) 	 	 	59	 	 	 	50	 
	 Dividend income
	  	 	30	 	 	 	31	 	 	 	—  	 	  	 	—  	 	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	30	 	 	 	31	 
	 Operating revenues
	  	 	12	 	 	 	12	 	 	 	—  	 	  	 	—  	 	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	12	 	 	 	12	 
	 Operations and maintenance
	  	 	(5	) 	 	 	(5	) 	 	 	—  	 	  	 	—  	 	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(5	) 	 	 	(5	) 
	 General and administrative
	  	 	(1	) 	 	 	(1	) 	 	 	—  	 	  	 	—  	 	  	 	—  	 	 	 	—  	 	 	 	(8	) 	 	 	(9	) 	 	 	(9	) 	 	 	(10	) 
	 Project development
	  	 	—  	 	 	 	—  	 	 	 	—  	 	  	 	—  	 	  	 	—  	 	 	 	—  	 	 	 	(16	) 	 	 	(40	) 	 	 	(16	) 	 	 	(40	) 
	 Depreciation and amortization
	  	 	(4	) 	 	 	(3	) 	 	 	—  	 	  	 	—  	 	  	 	—  	 	 	 	—  	 	 	 	(1	) 	 	 	(1	) 	 	 	(5	) 	 	 	(4	) 
	 Interest and other finance
	  	 	(1	) 	 	 	(1	) 	 	 	—  	 	  	 	—  	 	  	 	—  	 	 	 	—  	 	 	 	(11	) 	 	 	(8	) 	 	 	(12	) 	 	 	(9	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net income (loss) before tax from continuing operations
	  	 	87	 	 	 	84	 	 	 	3	 	  	 	2	 	  	 	—  	 	 	 	—  	 	 	 	(36	) 	 	 	(61	) 	 	 	54	 	 	 	25	 
	 Tax expense(3)
	  	 	—  	 	 	 	—  	 	 	 	—  	 	  	 	—  	 	  	 	—  	 	 	 	—  	 	 	 	(13	) 	 	 	(9	) 	 	 	(13	) 	 	 	(9	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net income (loss) from continuing operations
	  	 	87	 	 	 	84	 	 	 	3	 	  	 	2	 	  	 	—  	 	 	 	—  	 	 	 	(49	) 	 	 	(70	) 	 	 	41	 	 	 	16	 
	 Discontinued operations
	  				 				 				  				  				 				 				 				 				 			
	 Net income (loss) before tax from discontinued operations
	  	 	—  	 	 	 	—  	 	 	 	—  	 	  	 	—  	 	  	 	16	 	 	 	(3	) 	 	 	—  	 	 	 	—  	 	 	 	16	 	 	 	(3	) 
	 Tax recovery from discontinued operations
	  	 	—  	 	 	 	—  	 	 	 	—  	 	  	 	—  	 	  	 	(4	) 	 	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	(4	) 	 	 	—  	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net income (loss) from discontinued operations
	  	 	—  	 	 	 	—  	 	 	 	—  	 	  	 	—  	 	  	 	12	 	 	 	(3	) 	 	 	—  	 	 	 	—  	 	 	 	12	 	 	 	(3	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net income (loss)
	  	 	87	 	 	 	84	 	 	 	3	 	  	 	2	 	  	 	12	 	 	 	(3	) 	 	 	(49	) 	 	 	(70	) 	 	 	53	 	 	 	13	 
	 Preferred Share dividends
	  	 	—  	 	 	 	—  	 	 	 	—  	 	  	 	—  	 	  	 	—  	 	 	 	—  	 	 	 	(6	) 	 	 	(6	) 	 	 	(6	) 	 	 	(6	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Net income (loss) attributable to Common Shares
	  	 	87	 	 	 	84	 	 	 	3	 	  	 	2	 	  	 	12	 	 	 	(3	) 	 	 	(55	) 	 	 	(76	) 	 	 	47	 	 	 	7	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total assets(4)
	  	 	2,514	 	 	 	2,589	 	 	 	932	 	  	 	899	 	  	 	779	 	 	 	914	 	 	 	515	 	 	 	103	 	 	 	4,740	 	 	 	4,505	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Capital expenditures(5)
	  	 	—  	 	 	 	—  	 	 	 	19	 	  	 	5	 	  	 	—  	 	 	 	—  	 	 	 	—  	 	 	 	1	 	 	 	19	 	 	 	6	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	(1)	Includes NRGreen, which was not sold with the power business and has, therefore, been retrospectively reclassified to the Pipeline segment. 

	(2)	Reflects unallocated amounts applicable to Veresen’s head office activities. 

	(3)	The Company holds its ownership interests in multiple business lines through partnerships, which are consolidated into various corporate entities. Consequently, the tax provision is determined on a consolidated basis
and, as such, the Company is not able to present income tax by segment. 

	(4)	After giving effect to intersegment eliminations and allocations to businesses. 

	(5)	Reflects capital expenditures related only to wholly-owned and majority-controlled businesses. 

  
 14 

	9.	Supplemental Cash Flow Information 

  

									
	 	  	Three months ended March 31	 
	 	  	2017	 	  	2016	 
	 Accounts receivable
	  	 	1	 	  	 	(10	) 
	 Other assets
	  	 	(3	) 	  	 	(2	) 
	 Payables
	  	 	(11	) 	  	 	1	 
	 Interest payable
	  	 	4	 	  	 	—  	 
	 Accrued payables
	  	 	(2	) 	  	 	3	 
		  	  
	  
	 	  	  
	  
	 
	 Changes in non-cash operating working capital
	  	 	(11	) 	  	 	(8	) 
		  	  
	  
	 	  	  
	  
	 

  

	10.	Commitments and Contingencies 

 On March 31, 2017, Ruby Pipeline L.L.C. entered into a one-year term loan with a syndicate of lenders to refinance the US$250 million (100%) medium term note, which matured on April 1, 2017. Commencing June 30, 2017, the loan will be repaid by Ruby via
three equal quarterly payments of approximately US$16 million (100%), with the remaining balance of US$202 million (100%) due on March 31, 2018. To fund these debt repayments, Kinder Morgan Inc and the Company will contribute funds in
the form of a subordinated note maturing March 31, 2026, bearing interest at a rate of 10% per year. The Company’s 50% ownership interest will result in three quarterly payments of approximately US$8 million, with a final payment
of approximately US$101 million to be made on March 31, 2018. 
 On April 15, 2015, Aux Sable received a Notice and Finding of Violation from
the United States Environmental Protection Agency (“EPA”) for exceedances of permitted limits for Volatile Organic Compounds at Aux Sable’s Channahon, Illinois Facility. Aux Sable is engaged in discussions with the EPA to resolve the
matter. The initial EPA proposal confirms the settlement will not be material to earnings. 
 On March 30, 2012, a Statement of Claim was filed against
the Company’s equity-accounted investees, Aux Sable Liquid Products, L.P., Aux Sable Canada L.P., Aux Sable Extraction LP and Aux Sable Canada Ltd., claiming various relief including damages of US$13 million (42.7%), relating to
differences in interpretation of certain terms of the NGL Sales Agreement. On October 14, 2016 an Amended Statement of Claim was filed disputing the application by Aux Sable of certain additional elements of the NGL Sales Agreement and
increasing the damages claim to US$150 million (42.7%). Aux Sable filed a Statement of Defence on January 5, 2017 and BP filed a corresponding Reply on January 31, 2017. Aux Sable will fully defend its position in this matter and at
this time is unable to predict the likely outcome. Management believes the amount of estimated loss accrued in the financial statements is consistent with requirements under US GAAP. It is reasonably possible that amounts accrued in relation to
the matter may change in the future. 
  

	11.	Variable Interest Entities 

 As a result of adopting ASU 2015-02,
a number of entities controlled by the Company are now considered to be Variable Interest Entities (“VIEs”). The Company consolidates VIEs in which it has a variable interest and for which it is considered to be the primary beneficiary.
VIEs in which the Company has a variable interest but is not the primary beneficiary are accounted for as equity investments. 

  
 15 

 Consolidated VIEs 

Under the new consolidation standard, a certain number of the Company’s wholly-owned and controlled limited partnerships will continue to be consolidated,
but are now deemed to be VIEs. For these limited partnerships, the Company has the power to direct activities that most significantly impact its economic performance and the obligation to absorb losses or the right to receive benefits. On an
aggregate basis, as at March 31, 2017 these VIEs have total assets of $169 million (December 31, 2016 - $168 million) and total liabilities of $116 million (December 31, 2016 - $117 million), of which $77 million
(December 31, 2016 - $77 million) relates to non-recourse debt. The assets of these VIEs must first be used for the settlement of the VIEs’ obligations. 

  
 16 

 Non-consolidated VIEs 

The Company’s non-consolidated VIE consists of one legal entity, Veresen Midstream, where the Company does not
have the power to direct activities that most significantly impact the economic performance of this VIE. The Company is not the primary beneficiary and, consequently, this entity is accounted for as an equity investment (note 4). The maximum
exposure to loss as a result of the Company’s involvement with this VIE is limited to the carrying value of the investment (note 4). None of the Company’s other jointly-controlled businesses are classified as VIEs. 

 

	12.	Subsequent Events 

 Combination with Pembina 

On May 1, 2017 Pembina Pipeline Corporation (“Pembina”) and the Company announced they had entered into an arrangement agreement (the
“Transaction”) under which Pembina will acquire all of the issued and outstanding Veresen common shares in exchange for either (i) 0.4287 of a common share of Pembina or (ii) $18.65 in cash, subject to
pro-ration based on maximum share consideration of 99.5 million Pembina common shares and maximum cash consideration of approximately $1.523 billion. The Transaction was unanimously approved by the
Boards of Directors of both companies and is expected to close in the third or fourth quarter of 2017. The Transaction is subject to approval of at least 66 2/3% of holders of Veresen’s common shares at a special meeting of Veresen common
shareholders represented in person or by proxy to be called to consider the Transaction, approval of the Court of Queen’s Bench, certain regulatory approvals in Canada and the U.S. and other customary conditions. 

Dividends 
 On April 19, 2017 the Company declared
dividends of $0.0833 per Common Share. These dividends are payable on May 23, 2017 to shareholders of record on April 28, 2017. 
 Sale of Gas-Fired Power Generation Assets 
 On April 17, 2017, the Company closed the sale of its interests in East
Windsor Cogeneration and York Energy Centre for proceeds of $477 million less $242 million of project level financing and working capital adjustments. 

  
 17EX-4.10

 Exhibit 4.10 

APPENDIX I 
 PEMBINA
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION 
 In connection with a proposed plan of arrangement
(the “Arrangement”) under the Business Corporations Act (Alberta) (the “ABCA”) involving, among others, Veresen Inc. (“Veresen”), the holders (“Veresen Common Shareholders”)
of common shares in the capital of Veresen (the “Veresen Common Shares”), and the holders (“Veresen Preferred Shareholders” and together with the Common Shareholders, the “Veresen Shareholders”) of
the cumulative redeemable preferred shares, series A, B, C, D, E and F, of Veresen (collectively, “Veresen Preferred Shares”) and Pembina Pipeline Corporation (“Pembina”), the following unaudited pro forma
condensed combined financial information, referred to herein as the pro forma financial information, presents the effect of the Arrangement on the combined historical financial statements of Veresen and Pembina. 

Veresen and Pembina entered into an arrangement agreement dated May 1, 2017 (the “Arrangement Agreement”). Pursuant to
the Arrangement Agreement and the accompanying Arrangement, Pembina will acquire all of the issued and outstanding Veresen Common Shares. Pursuant to the Arrangement, Veresen Common Shareholders will receive (i) 0.4287 common shares in the capital
of Pembina (each one share, a “Pembina Common Share”) or (ii) $18.65 in cash, for each Veresen Common Share held, subject to pro-rationing based on maximum share consideration of
99,500,000 Pembina Common Shares and maximum cash consideration of $1,522,500,000. Immediately following completion of the Arrangement, assuming full pro-rationing and the issuance of the maximum number of
Pembina Common Shares and maximum cash consideration, former Veresen Common Shareholders are anticipated to own approximately 20% of the combined entity and current holders of Pembina Common Shares are anticipated to own approximately 80% of the
combined entity. The Arrangement is currently anticipated to be completed in the second half of 2017, subject to the satisfaction of customary closing conditions, including receipt of the Required Regulatory Approvals (as defined below), approval by
the Court of Queen’s Bench of Alberta and approval by the Veresen Common Shareholders of a resolution approving the Arrangement (the “Common Shareholder Resolution”) by at least
662/3% of the votes cast by Veresen Common Shareholders, present in person or represented by proxy at a special meeting of the Common Shareholders to be held on July 11, 2017 (the
“Common Shareholder Meeting”). The pro forma information has been prepared using the assumption that full pro-rationing will occur and the maximum number of Pembina Common Shares will
be issued and the maximum amount of cash consideration paid pursuant to the Arrangement. 
 In addition, Veresen will be seeking approval of
the Veresen Preferred Shareholders to effect the exchange of the Veresen Preferred Shares for preferred shares of Pembina with the same terms and conditions as the outstanding Veresen Preferred Shares. For such exchange to occur at closing of the
Arrangement, a resolution of the Veresen Preferred Shareholders approving the Arrangement (the “Preferred Shareholder Resolution”) must be approved by at least 662/3% of the votes
cast by Veresen Preferred Shareholders, voting as one class, present in person or represented by proxy at a special meeting of Veresen Preferred Shareholders to be held on July 11, 2017 (the “Preferred Shareholder Meeting”).
Closing of the Arrangement is not conditional on the approval of the Veresen Preferred Shareholder Resolution; however the exchange of Veresen Preferred Shares has been assumed in the pro forma information. Completion of the Arrangement is
subject to approval of the Toronto Stock Exchange (“TSX”) and the New York Stock Exchange, as applicable, for the listing of the Pembina Common Shares and (subject to the Preferred Shareholder Resolution receiving the requisite
approvals) the preferred shares of Pembina issuable pursuant to the Arrangement, approval under the Competition Act and the Canada Transportation Act and will be subject to the expiration or termination of any applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “Required Regulatory Approvals”). 

The pro forma financial information described below gives pro forma effect to the Arrangement in accordance with
Section 8.4(7) of National Instrument 51-102 - Continuous Disclosure Obligations of the Canadian Securities Administrators (“NI 51-102”) by
applying pro forma adjustments to Veresen’s and Pembina’s historical consolidated financial statements, which are incorporated by reference into the management information circular of Veresen in relation to the Common Shareholder
Meeting and the Preferred Shareholder Meeting, dated June 5, 2017 (the “Circular”). The pro forma financial information has been derived from the respective historical consolidated financial statements of Veresen and
Pembina, along with certain adjustments and assumptions made to give effect to 

  
 I-1 

 
the Arrangement. Adjustments in accordance with NI 51-102 include only adjustments to conform Veresen’s financial statement amounts to Pembina’s
accounting policies and adjustments for those pro forma events that are (a) directly attributable to the Arrangement for which there are firm commitments and (b) for which the complete financial effects are objectively determinable.
No adjustments have been made to eliminate non-recurring effects of the Arrangement that are not expected to continue in future periods, to eliminate discontinued operations or to adjust the related assets or
liabilities associated with assets held for sale. The pro forma adjustments are based upon available information and certain assumptions that management of Veresen and Pembina each believe are reasonable under the circumstances. 

The Arrangement is more particularly described and set forth in the Circular accompanying the pro forma financial information. 

The pro forma financial information presents the combined effect on the historical statements and provides the following resulting
information: 
  

					
	 Historical Information of

Veresen and Pembina
	  	 Historical Dates and Giving Effect
	  	 Resulting Information

	Consolidated statements of financial position	  	As at March 31, 2017	  	Unaudited pro forma condensed combined statement of financial position, referred to as the pro forma statement of financial position
			
	Consolidated statements of earnings	  	For the year ended December 31, 2016; and for the three months ended March 31, 2017	  	Unaudited pro forma condensed combined statements of earnings, referred to as the pro forma statements of earnings. Fair value adjustments to net assets acquired at March 31, 2017 have been applied to an assumed
acquisition date of January 1, 2016 for purposes of the pro forma statements of earnings

 The pro forma financial information is presented for illustrative purposes only and does not include,
among other things, estimated cost synergies, adjustments related to restructuring or integration activities, further acquisitions or disposals not yet known or probable, or impacts of Arrangement-related change in control provisions that are
currently not factually supportable and/or probable of occurring. Therefore, the pro forma condensed combined financial information is presented for informational purposes only and is not necessarily indicative of what Pembina’s actual
financial condition or results of operations would have been had the Arrangement been completed on the date indicated, nor does it purport to project Pembina’s future financial position or results of operations for any future period or as of
any future date. Accordingly, the combined business, assets, results of operations and financial condition may differ significantly from those indicated. 

The Arrangement shall constitute a “change in control” for purposes of the applicable Veresen long term incentive and executive
employment plans and, as a result, units outstanding under these plans will vest and, together with payments due under the executive employment agreements, be settled in cash immediately prior to the effective time of the Arrangement. The pro
forma financial information recognizes these payments. 

  
 I-2 

 All pro forma adjustments and their underlying assumptions are described more fully in the
notes to this pro forma financial information. The pro forma financial information should be read in conjunction with the following: 
  

	 	(a)	The accompanying notes to the unaudited pro forma condensed combined financial information; 

  

	 	(b)	The audited consolidated financial statements of Veresen as at and for the year ended December 31, 2016 and the related notes; 

  

	 	(c)	The unaudited interim consolidated financial statements of Veresen as at and for the three months ended March 31, 2017 and the related notes (collectively with item (b), “Veresen’s historical financial
statements”); 

  

	 	(d)	The audited consolidated financial statements of Pembina as at and for the year ended December 31, 2016 and the related notes; and, 

 

	 	(e)	The unaudited interim condensed consolidated financial statements of Pembina as at and for the three months ended March, 2017 and the related notes (collectively with item (d), “Pembina’s historical
financial statements”). 

  
 I-3 

 PEMBINA PIPELINE CORPORATION 

Unaudited Pro Forma Condensed Combined Statement of Financial Position 

As at March 31, 2017 
  

																					
	 	  	Historical	 	 	Pro Forma	 	 	Note 4	 	  	Combined	 
	 	  	Pembina	 	 	Veresen(1)	 	 	Adjustments	 	 	Reference(s)	 	  	Pro Forma	 
	(in millions of Cdn dollars)	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 
	 Assets
	  				 				 				 				  			
	 Current Assets
	  				 				 				 				  			
	 Cash and cash equivalents
	  	 	36	 	 	 	163	 	 	 	(41	) 	 	 	b(iv)	 	  	 	158	 
	 Trade receivable and other
	  	 	463	 	 	 	29	 	 				 				  	 	492	 
	 Distributions receivable
	  				 	 	65	 	 				 				  	 	65	 
	 Derivative financial instruments
	  	 	6	 	 				 				 				  	 	6	 
	 Inventory
	  	 	123	 	 				 				 				  	 	123	 
	 Assets held for sale
	  				 	 	779	 	 				 				  	 	779	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Total current assets
	  	 	628	 	 	 	1,036	 	 	 	(41	) 	 				  	 	1,623	 
	 Non-current assets
	  				 				 				 				  			
	 Property, plant and equipment
	  	 	12,002	 	 	 	315	 	 	 	12	 	 	 	b(iii)	 	  	 	12,329	 
	 Intangible assets and goodwill
	  	 	2,826	 	 	 	45	 	 	 	3,617	 	 	 	b(i)	 	  	 	6,488	 
	 Investments in jointly-controlled businesses
	  	 	131	 	 	 	1,535	 	 	 	1,804	 	 	 	b(ii)	 	  	 	3,470	 
	 Investments held at cost
	  				 	 	1,804	 	 	 	(1,804	) 	 	 	b(ii)	 	  			
	 Deferred tax assets
	  	 	27	 	 				 				 				  	 	27	 
	 Other receivables
	  	 	11	 	 	 	5	 	 				 				  	 	16	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Total Assets
	  	 	15,625	 	 	 	4,740	 	 	 	3,588	 	 				  	 	23,953	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Liabilities
	  				 				 				 				  			
	 Current liabilities
	  				 				 				 				  			
	 Trade payables and accrued liabilities
	  	 	774	 	 	 	51	 	 	 	79	 	 	 	b(iv)	 	  	 	904	 
	 Taxes payable
	  	 	4	 	 	 	10	 	 				 				  	 	14	 
	 Dividends payable
	  	 	64	 	 	 	26	 	 				 				  	 	90	 
	 Loans and borrowings
	  	 	6	 	 	 	4	 	 				 				  	 	10	 
	 Derivative financial instruments
	  	 	10	 	 				 				 				  	 	10	 
	 Liabilities associated with assets held for sale
	  				 	 	173	 	 				 				  	 	173	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Total current liabilities
	  	 	858	 	 	 	264	 	 	 	79	 	 				  	 	1,201	 
	 Non-current liabilities
	  				 				 				 				  			
	 Loans and borrowings
	  	 	4,333	 	 	 	1,425	 	 	 	1,560	 	 	 	b(i)	 	  	 	7,318	 
	 Convertible debentures
	  	 	144	 	 				 				 				  	 	144	 
	 Derivative financial instruments
	  	 	57	 	 				 				 				  	 	57	 
	 Employee benefits
	  	 	39	 	 				 				 				  	 	39	 
	 Deferred revenue
	  	 	88	 	 				 				 				  	 	88	 
	 Decommissioning provision
	  	 	504	 	 				 	 	12	 	 	 	b(iii)	 	  	 	516	 
	 Deferred tax liabilities
	  	 	1,175	 	 	 	223	 	 	 	(32	) 	 	 	b(v)	 	  	 	1,366	 
	 Other liabilities
	  				 	 	47	 	 				 				  	 	47	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Total Liabilities
	  	 	7,198	 	 	 	1,959	 	 	 	1,619	 	 				  	 	10,776	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Equity
	  				 				 				 				  			
	 Common share capital
	  	 	8,935	 	 	 	3,482	 	 	 	846	 	 	 	b(i)	 	  	 	13,263	 
	 Preferred share capital
	  	 	1,509	 	 	 	536	 	 	 	(26	) 	 	 	b(i)	 	  	 	2,019	 
	 Deficit
	  	 	(2,005	) 	 	 	(1,527	) 	 	 	1,439	 	 	 	b(i), b(iv), b(vi)	 	  	 	(2,093	) 
	 Additional paid in capital
	  				 	 	28	 	 	 	(28	) 	 	 	b(i)	 	  			
	 Accumulated other comprehensive income
	  	 	(12	) 	 	 	262	 	 	 	(262	) 	 	 	b(i)	 	  	 	(12	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Total Equity
	  	 	8,427	 	 	 	2,781	 	 	 	1,969	 	 				  	 	13,177	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Total Liabilities and Equity
	  	 	15,625	 	 	 	4,740	 	 	 	3,588	 	 				  	 	23,953	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 

  

	(1)	The financial information in this column has been derived from Veresen’s historical financial statements as at March 31, 2017 with certain reclassifications
as described in further detail in Note 6. 

 See the accompanying notes to this Unaudited Pro Forma Condensed Combined Financial
Information, which are an integral part of this pro forma financial information. 

  
 I-4 

 PEMBINA PIPELINE CORPORATION 

Unaudited Pro Forma Condensed Combined Statement of Earnings 

For the year ended December 31, 2016 
  

																					
	 	  	Historical	 	 	Pro Forma	 	 	Note 4	 	  	Combined	 
	 	  	Pembina(1)	 	 	Veresen(1)	 	 	Adjustments	 	 	Reference(s)	 	  	Pro Forma	 
	 (in millions of Cdn dollars)
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 
	 Revenue
	  	 	4,265	 	 	 	53	 	 				 				  	 	4,318	 
	 Cost of sales
	  	 	3,193	 	 	 	29	 	 				 				  	 	3,222	 
	 Loss on commodity related financial derivative instruments
	  	 	(71	) 	 				 				 				  	 	(71	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Gross Profit
	  	 	1,001	 	 	 	24	 	 				 				  	 	1,025	 
	 General and administrative
	  	 	195	 	 	 	52	 	 				 				  	 	247	 
	 Other income
	  	 	(1	) 	 				 				 				  	 	(1	) 
	 Project development
	  				 	 	133	 	 				 				  	 	133	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Results from operating activities
	  	 	807	 	 	 	(161	) 	 				 				  	 	646	 
	 Asset impairment loss
	  				 	 	103	 	 	 	(103	) 	 	 	c(iii)	 	  			
	 Net finance costs
	  	 	153	 	 	 	37	 	 	 	27	 	 	 	c(i), c(ii)	 	  	 	217	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Earnings (loss) before equity income and income tax
	  	 	654	 	 	 	(301	) 	 	 	(76	) 	 				  	 	429	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Equity income
	  	 	1	 	 	 	149	 	 	 	71	 	 	 	c(ii), c(iv), c(v), c(vi)	 	  	 	221	 
	 Dividend income
	  				 	 	121	 	 	 	(121	) 	 	 	c(iv)	 	  			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Earnings (loss) before income tax
	  	 	655	 	 	 	(31	) 	 	 	26	 	 				  	 	650	 
	 Current tax expense (recovery)
	  	 	50	 	 	 	11	 	 	 	(10	) 	 	 	c(vii)	 	  	 	51	 
	 Deferred tax expense (recovery)
	  	 	139	 	 	 	(51	) 	 	 	21	 	 	 	c(vii)	 	  	 	109	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Income tax expense
	  	 	189	 	 	 	(40	) 	 	 	11	 	 				  	 	160	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Earnings for the year
	  	 	466	 	 	 	9	 	 	 	15	 	 				  	 	490	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Discontinued operations income (loss)
	  				 	 	(3	) 	 				 				  	 	(3	) 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Earnings for the year
	  	 	466	 	 	 	6	 	 	 	15	 	 				  	 	487	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 

  

	(1)	The financial information in this column has been derived from Pembina and Veresen’s historical financial statements for the year ended December 31, 2016
with certain reclassifications as described in further detail in Note 6. 

 See the accompanying notes to this Unaudited Pro Forma
Condensed Combined Financial Information, which are an integral part of this pro forma financial information. 

  
 I-5 

 PEMBINA PIPELINE CORPORATION 

Unaudited Pro Forma Condensed Combined Statement of Earnings 

For the three months ended March 31, 2017 
  

																					
	 	  	Historical	 	 	Pro Forma	 	 	Note 4	 	  	Combined	 
	 	  	Pembina	 	 	Veresen(1)	 	 	Adjustments	 	 	Reference(s)	 	  	Pro Forma	 
	 (in millions of Cdn dollars)
	  	 	 	 	 	 	 	 	 	 	 	 	  	 	 
	 Revenue
	  	 	1,485	 	 	 	12	 	 				 				  	 	1,497	 
	 Cost of sales
	  	 	1,117	 	 	 	6	 	 				 				  	 	1,123	 
	 Gain on commodity related financial derivative instruments
	  	 	13	 	 				 				 				  	 	13	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Gross Profit
	  	 	381	 	 	 	6	 	 				 				  	 	387	 
	 General and administrative
	  	 	60	 	 	 	13	 	 				 				  	 	73	 
	 Other income
	  	 	(3	) 	 				 				 				  	 	(3	) 
	 Project development
	  				 	 	16	 	 				 				  	 	16	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Results from operating activities
	  	 	324	 	 	 	(23	) 	 				 				  	 	301	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Net finance costs
	  	 	30	 	 	 	12	 	 	 	8	 	 	 	c(i), c(ii)	 	  	 	50	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Earnings (loss) before equity income and income tax
	  	 	294	 	 	 	(35	) 	 	 	(8	) 	 				  	 	251	 
	 Equity income
	  				 	 	59	 	 	 	30	 	 	 	c(ii), c(iv), c(v), c(vi)	 	  	 	89	 
	 Dividend income
	  				 	 	30	 	 	 	(30	) 	 	 	c(iv)	 	  			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Earnings before income tax
	  	 	294	 	 	 	54	 	 	 	(8	) 	 				  	 	340	 
	 Current tax expense (recovery)
	  	 	12	 	 	 	3	 	 	 	(2	) 	 	 	c(vii)	 	  	 	13	 
	 Deferred tax expense
	  	 	67	 	 	 	10	 	 				 	 	c(vii)	 	  	 	77	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Income tax expense
	  	 	79	 	 	 	13	 	 	 	(2	) 	 				  	 	90	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Earnings for the period
	  	 	215	 	 	 	41	 	 	 	(6	) 	 				  	 	250	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Discontinued operations income
	  				 	 	12	 	 				 				  	 	12	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 
	 Earnings for the period
	  	 	215	 	 	 	53	 	 	 	(6	) 	 				  	 	262	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 				  	  
	  
	 

  

	(1)	The financial information in this column has been derived from Veresen’s historical financial statements for the three months ended March 31, 2017 with
certain reclassifications as described in further detail in Note 6. 

 See the accompanying notes to this Unaudited Pro Forma Condensed
Combined Financial Information, which are an integral part of this pro forma financial information. 

  
 I-6 

 PEMBINA 

NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED FINANCIAL INFORMATION 

(millions of Cdn dollars, except as otherwise noted) 

Note 1 Description of the Arrangement 

Veresen and Pembina entered into the Arrangement Agreement on May 1, 2017. Pursuant to the Arrangement Agreement and the accompanying
Arrangement, Pembina will acquire all of the issued and outstanding Veresen Common Shares. Pursuant to the Arrangement, Veresen Shareholders will receive (i) 0.4287 Pembina Common Shares or (ii) $18.65 in cash, for each Veresen Share held, subject
to pro-rationing based on maximum share consideration of 99,500,000 Pembina common shares and maximum cash consideration of $1,522,500,000. Immediately following completion of the Arrangement, assuming full pro-rationing and the issuance of the maximum number of Pembina Common Shares and maximum cash consideration, former Veresen Common Shareholders are anticipated to own approximately 20% of the combined entity and
current holders of Pembina Common Shares are anticipated to own approximately 80% of the combined entity. The Arrangement is currently anticipated to be completed in the second half of 2017, subject to the satisfaction of customary closing
conditions, including receipt of the Required Regulatory Approvals, approval by the Court of Queen’s Bench of Alberta and approval by the Veresen Common Shareholders of the Common Shareholder Resolution by at least 662/3% of the votes cast by Veresen Common Shareholders, present in person or represented by proxy at the Common Shareholder Meeting. The pro forma information has been prepared using the
assumption that full pro-rationing will occur and the maximum number of Pembina Common Shares will be issued and the maximum amount of cash consideration paid pursuant to the Arrangement. 

In addition, Veresen will be seeking approval of the Veresen Preferred Shareholders to effect the exchange of the Veresen Preferred Shares for
the Pembina Exchange Shares. For such exchange to occur at closing of the Arrangement, the Preferred Shareholder Resolution must be approved by at least 662/3% of the votes cast by Veresen
Preferred Shareholders, voting as one class, present in person or represented by proxy at the Preferred Shareholder Meeting. Closing of the Arrangement is not conditional on the approval of the Veresen Preferred Shareholder Resolution; however the
exchange of Veresen Preferred Shares has been assumed in the pro forma information. 
 The pro forma financial information
described below gives pro forma effect to the Arrangement in accordance with Section 8.4(7) of NI 51-102 by applying pro forma adjustments to Veresen’s and Pembina’s historical
consolidated financial statements, which are incorporated by reference into the management information circular in relation to the Common Shareholder Meeting and the Preferred Shareholder Meeting, dated June 5, 2017. The pro forma
financial information has been derived from the respective historical consolidated financial statements of Veresen and Pembina, along with certain adjustments and assumptions made to give effect to the Arrangement. Adjustments in accordance with NI 51-102 include only adjustments to conform Veresen’s financial statement amounts to Pembina’s accounting policies and adjustments for those pro forma events that are (a) directly attributable
to the Arrangement for which there are firm commitments and (b) for which the complete financial effects are objectively determinable. No adjustments have been made to eliminate non-recurring effects of
the Arrangement that are not expected to continue in future periods, or to eliminate discontinued operations or adjust the related assets or liabilities associated with assets held for sale. The pro forma adjustments are based upon available
information and certain assumptions that management of Veresen and Pembina each believe are reasonable under the circumstances. 
 The
Arrangement is more particularly described and set forth in the Circular accompanying the pro forma financial information. 

  
 I-7 

 Note 2 Basis of Presentation 

The pro forma financial information gives pro forma effect to the Arrangement in accordance with Section 8.4(7) of NI 51-102 by applying pro forma adjustments to Veresen’s and Pembina’s historical consolidated financial statements, which are incorporated by reference into the Circular. The pro forma
financial information has been derived from the respective historical consolidated financial statements of Veresen and Pembina, along with certain adjustments and assumptions made to give effect to the Arrangement. Adjustments in accordance with
NI 51-102 include only adjustments to conform Veresen’s financial statement amounts to Pembina’s accounting policies and adjustments for those pro forma events that are (a) directly
attributable to the Arrangement for which there are firm commitments and (b) for which the complete financial effects are objectively determinable. No adjustments have been made to eliminate non-recurring
effects of the Arrangement that are not expected to continue in the statement of earnings in future periods, to eliminate discontinued operations and the related assets or liabilities associated with assets held for sale or to recognize adjustments
to either parties’ interests in their recognized assets or liabilities due to the outcome of the finalization of their processes to closing. The pro forma adjustments are based upon available information and certain assumptions that
management of Veresen and Pembina each believes are reasonable under the circumstances. 
 The pro forma financial information
combines and provides the following: 
  

					
	 Historical Information of

Veresen and Pembina
	  	 Historical Dates and Giving Effect
	  	 Resulting Information

	Consolidated statements of financial position	  	As of March 31, 2017	  	Unaudited pro forma condensed combined statement of financial position, referred to as the pro forma statement of financial position
			
	Consolidated statements of earnings	  	For the year ended December 31, 2016; and for the three months ended March 31, 2017	  	Unaudited pro forma condensed combined statements of earnings, referred to as the pro forma statements of earnings. Fair value adjustments to net assets acquired at March 31, 2017 have been applied to an assumed
acquisition date of January 1, 2016 for purposes of the pro forma statements of earnings

 The pro forma financial information is presented for illustrative purposes only and does not include,
among other things, estimated cost synergies, adjustments related to restructuring or integration activities, former acquisitions or disposals, or impacts of Arrangement-related change in control provisions that are currently not factually
supportable and/or probable of occurring. Therefore, the pro forma condensed combined financial information is presented for informational purpose only and is not necessarily indicative of what Pembina’s actual financial condition or
results of operations would have been had the Arrangement been completed on the date indicated, nor does it purport to project Pembina’s future financial position or results of operations for any future period or as of any future date.
Accordingly, the combined business, assets, results of operations and financial condition may differ significantly from those indicated. 

The pro forma financial information should be read in conjunction with Veresen’s historical financial statements and
Pembina’s historical financial statements. Veresen’s historical financial statements have been adjusted to reclassify line items to conform to Pembina’s presentation. Additional reclassifications may be necessary on completion of the
Arrangement. 
 The Arrangement has been accounted for in the pro forma financial information using the acquisition method under
International Financial Reporting Standard 3—Business Combinations (“IFRS 3”) of the International Accounting Standards Board (“IASB”). Pembina is the acquiring entity for accounting purposes. 

At the date of preparation of this pro forma financial information, certain pro forma adjustments have been made as identified
herein. See Note 4 for further details. 
 The Arrangement consideration in the pro forma financial information is based on the
closing price of Pembina shares on the TSX on April 28, 2017 the last trading day on which Pembina Shares traded prior to Veresen and Pembina announcing the Arrangement. However, the actual purchase price will be based on the closing price of
Pembina shares on the TSX on the date of closing of the Arrangement. Accordingly, the purchase price and the value of identifiable assets acquired, liabilities assumed and goodwill ultimately recorded at the date of closing of the Arrangement could
differ materially. 

  
 I-8 

 Note 3 Significant Accounting Policies 

The accounting policies used in the preparation of the pro forma financial information are those set out in Pembina’s audited
consolidated financial statements as at and for the year ended December 31, 2016, which were prepared in accordance with International Financial Reporting Standards as issued by the IASB (“IFRS”). Veresen’s audited
consolidated financial statements as at and for the year ended December 31, 2016 were prepared in accordance with United States Generally Accepted Accounting Principles (“US GAAP”). The pro forma financial information
has been prepared based on the historical financial statements of Veresen and Pembina. For the purposes of this pro forma financial information, Veresen and Pembina completed a review of potential adjustments needed to conform Veresen’s
historical financial statements to Pembina’s and concluded that there were adjustments required to conform Veresen’s financial statements from US GAAP to IFRS (“IFRS adjustments”). Upon completion of the Arrangement,
Pembina will perform a further review and comparison of the accounting policies of Veresen and Pembina. From that review, Pembina may identify differences between the accounting policies of the two companies that, when conformed, could have a
material impact on the financial statements of Pembina. 
 Certain reclassifications were made to align the presentation of Veresen’s
historical financial statements with Pembina’s current presentation, as set out in Note 6. The reclassifications have no impact on the historical statements of income of Veresen and accordingly no impact on the pro forma statements of
earnings of Pembina. 
 Note 4 Pro Forma Adjustments 
  

	(a)	Pro Forma Purchase Price and Purchase Price Allocation 

 At the date of preparation of
this pro forma financial information, certain pro forma adjustments have been made as identified herein; however, the fair values of Veresen’s identifiable assets and liabilities to be assumed and the full impact of applying
acquisition accounting have not been fully determined. After reflecting the pro forma adjustments made herein, the excess of the purchase consideration over the adjusted book values of Veresen’s net assets has been presented as goodwill.
It is expected that following closing of the Arrangement and once detailed valuations and related calculations are completed, a material portion of the amount allocated to goodwill will be attributable to property, plant and equipment, investments
in jointly-controlled businesses, intangible assets, other assets and liabilities and related deferred income tax balances. Some property, plant and equipment and intangible assets are expected to be finite-lived and accordingly subject to
amortization. The actual amount assigned to the fair values of the identifiable assets and liabilities acquired will result in changes to earnings in periods subsequent to the Arrangement, and those changes could be material. 

Details of the Arrangement are as follows: 
  

					
	 Maximum Pembina shares to be issued in the Arrangement (millions of shares)
	  	 	99.5	 
	 Pembina closing share price as at April 28, 2017 (dollars)
	  	 	43.5	 

  
 I-9 

 Arrangement consideration, pro forma net assets acquired and goodwill: 

 

					
	 ($millions)
	  	 	 
	 Pembina share consideration
	  	 	4,328	 
	 Pembina cash consideration
	  	 	1,523	 
	 Pembina preferred shares issued to replace Veresen preferred shares
	  	 	510	 
		  	  
	  
	 
	 Total pro forma Arrangement consideration
	  	 	6,361	 
		  	  
	  
	 
	 Veresen net assets as at March 31, 2017, per Veresen’s historical financial
statements
	  	 	2,781	 
	 Fair value adjustments Increase long-term debt to fair value as at March 31, 2017
	  	 	37	 
		  	  
	  
	 
	 Fair value of Veresen net assets acquired
	  	 	2,744	 
	 Calculated pro forma Arrangement goodwill
	  	 	3,617	 
		  	  
	  
	 
		  	 	6,361	 
		  	  
	  
	 

	(b)	Pro Forma Statement of Financial Position 

 The pro forma statement of financial
position as at March 31, 2017 has been adjusted to give effect to the consummation of the Arrangement and exchange of Veresen preferred shares to Pembina preferred shares with the same terms and conditions, as if it had occurred on
March 31, 2017. The following pro forma adjustments and IFRS adjustments were made: 
  

	 	(i)	Certain liabilities have been adjusted to fair values as described in Note 4(a). The pro forma excess of the estimated Arrangement consideration over the fair value of Veresen’s assets and liabilities has
been recorded as goodwill. 

  

	 	(ii)	Veresen’s Investments held at cost of $1,804 million as of March 31, 2017 related to the Ruby Pipeline preferred interest have been recorded as Investments in jointly-controlled businesses.

  

	 	(iii)	Asset retirement obligations (“ARO”) under IFRS have been estimated for Veresen’s property, plant and equipment resulting in an increase of $12 million to both decommissioning provision and
property, plant and equipment. An ARO adjustment of $257 million relating to property, plant and equipment owned by entities accounted for as Investments in jointly controlled businesses has resulted in an increase and corresponding decrease to
Investments in jointly controlled businesses. 

  

	 	(iv)	Change in control payments of $79 million related to compensation were accrued in Trade payables and accrued liabilities based on estimates by Pembina management. Cash was adjusted for estimated transaction costs
of $41 million. 

  

	 	(v)	Adjustment to deferred income tax liabilities consists of the income tax effects related to change in control payments related to executive compensation ($21 million) and transaction costs expected to be incurred by
Veresen and Pembina ($11 million). 

  

	 	(vi)	In addition to (i), adjustment to deficit consists of the after income tax effects for compensation and transaction expenses ($88 million). 

 

	(c)	Pro Forma Statements of Earnings 

 The pro forma statements of earnings for the
year ended December 31, 2016 and the three months ended March 31, 2017 have been adjusted to give effect to the consummation of the Arrangement as if it had occurred on January 1, 2016. The following pro forma adjustments were
made: 
  

	 	(i)	The interest expense on cash drawn on Pembina’s line of credit for payments to Veresen shareholders and change in control payments has been recorded. Net finance costs have been increased by $36 million for
the year ended December 31, 2016 and $9 million for the three months ending March 31, 2017. 

  

	 	(ii)	The excess of the fair values of Veresen’s long-term debt over their carrying values were amortized using the effective interest method over the remaining terms of the long-term debt. Decreased finance costs of
$9 million and $1 million were recorded for the year ended December 31, 2016 and for the three months ended March 31, 2017, respectively. 

  
 I-10 

 The excess of the fair values of the long-term debt held by Veresen’s jointly controlled
businesses over the carrying values was amortized using the effective interest method over the remaining terms of the long-term debt. Decreased finance costs of $12 million and $3 million were recorded for the year ended December 31,
2016 and for the three months ended March 31, 2017, respectively as adjustments to equity income. 
  

	 	(iii)	The Ruby pipeline impairment of $103 million for the year ended December 31, 2016 has been reversed as the fair value of the asset at March 31, 2017 has been pushed back to January 1, 2016 for
purposes of the pro forma statements. 

  

	 	(iv)	The Ruby pipeline has been accounted for as an equity investment for the purposes of the pro forma statements. The Ruby equity interest consists of 50% voting unit ownership in the Ruby pipeline with preferential
rights to dividends and distributions. Equity income of $70 million and $30 million has been recognized for the year ended December 31, 2016 and for the three months ended March 31, 2017, net of depreciation expense incurred of
$70 million and $18 million and other expenses in those respective periods. The preferential dividend income of $121 million and $30 million for the year ended December 31, 2016 and three months ended March 31, 2017,
respectively has been derecognized. 

  

	 	(v)	Equity income has been adjusted for accretion expense relating to ARO adjustments of $5 million and $1 million recorded for the year ended December 31, 2016 and for the three months ended March 31,
2017, respectively. 

  

	 	(vi)	Equity income has been adjusted for depreciation of property, plant and equipment of $6 million and $2 million recognized for the year ended December 31, 2016 and for the three months ended March 31,
2017, respectively. 

  

	 	(vii)	Enacted or substantively enacted Canadian tax rate of 27% and US rate of 40% was used to determine the income tax effect of the above pro forma adjustments. The enacted or substantively enacted tax rate could be
different than the tax rates assumed for the purpose of preparing this pro forma financial information. 

  
 I-11 

 Note 5 Earnings per Share Information 

Pro forma net earnings per share 
  

									
	 	  	Year Ended 
December 31, 2016	 	  	 Three Months Ended

March 31, 2017
	 
	 Basic and diluted net earnings per share
(1)
	  				  			
	 Net earnings attributable to shareholders (millions)
	  	$	414	 	  	$	243	 
	 Weighted average shares (millions)
	  	 	487	 	  	 	497	 
		  	  
	  
	 	  	  
	  
	 
	 Net earnings per share (dollars)
	  	$	.85	 	  	$	.49	 
		  	  
	  
	 	  	  
	  
	 

  

	(1) 	Net earnings per share calculations are based on dollar amounts rounded to the nearest million and share amounts rounded to the nearest ten thousand. 

Note 6 Reclassification 
 The following
reclassifications were made to Pembina’s historical financial statements: 
  

	 	(a)	Pembina’s Consolidated Statement of Financial Position: Equity accounted investment has been recast on the balance sheet as Investments in jointly-controlled businesses. 

 

	 	(b)	Pembina’s Statements of Earnings: Share of profit from equity accounted investees has been recast as equity income. 

The following reclassifications were made to align the presentation of Veresen’s historical financial statements with Pembina’s
current presentation. The reclassifications have no impact on the historical net earnings of Veresen. 

  
 I-12 

 PEMBINA PIPELINE CORPORATION 

PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS RECLASSIFICATIONS 

For the year ended December 31, 2016 
 UNAUDITED

  

																	
	 	  	Veresen	 	 	Reclassification
Amounts	 	 	Amount after
Reclassification	 	 	Reference	 
	(in millions of Cdn dollars)	  	 	 	 	 	 	 	 	 	 	 	 
	 	  	2016	 	 	 	 	 	2016	 	 	 	 
	 Revenue
	  				 	 	53	 	 	 	53	 	 	 	1	 
	 Equity income
	  	 	149	 	 	 	(149	) 	 				 	 	2	 
	 Dividend income
	  	 	121	 	 	 	(121	) 	 				 	 	3	 
	 Operating revenues
	  	 	53	 	 	 	(53	) 	 				 	 	1	 
	 Operations and maintenance
	  	 	24	 	 	 	(24	) 	 				 	 	4	 
	 Cost of sales
	  				 	 	24	 	 	 	29	 	 	 	4	 
		  				 	 	5	 	 				 	 	8	 
	 General and administrative
	  	 	38	 	 	 	(38	) 	 				 	 	5	 
	 Impairment loss
	  	 	103	 	 	 	(103	) 	 				 	 	6	 
	 Project development
	  	 	133	 	 	 	(133	) 	 				 	 	7	 
	 Depreciation and amortization
	  	 	19	 	 	 	(19	) 	 				 	 	8	 
	 Interest and other finance
	  	 	39	 	 	 	(39	) 	 				 	 	9	 
	 Foreign exchange and other
	  	 	2	 	 	 	(2	) 	 				 	 	10	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Gross profit (loss)
	  	 	(31	) 	 	 	55	 	 	 	24	 	 			
	 General and administrative
	  				 	 	38	 	 	 	52	 	 	 	5	 
		  				 	 	14	 	 				 	 	8	 
	 Project development
	  				 	 	133	 	 	 	133	 	 	 	7	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Results from operating activities
	  	 	(31	) 	 	 	(130	) 	 	 	(161	) 	 			
	 Impairment loss
	  				 	 	103	 	 	 	103	 	 	 	6	 
	 Finance costs
	  				 	 	39	 	 	 	37	 	 	 	9	 
		  				 	 	(2	) 	 				 	 	10	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Earnings (loss) before equity income, dividend income and income tax
	  	 	(31	) 	 	 	(270	) 	 	 	(301	) 	 			
	 Equity income
	  				 	 	149	 	 	 	149	 	 	 	2	 
	 Dividend income
	  				 	 	121	 	 	 	121	 	 	 	3	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Earnings (loss) before income tax
	  	 	(31	) 	 				 	 	(31	) 	 			
	 Current taxes
	  	 	11	 	 				 	 	11	 	 			
	 Deferred taxes (recovery)
	  	 	(51	) 	 				 	 	(51	) 	 			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Income taxes
	  	 	(40	) 	 				 	 	(40	) 	 			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Earnings for the year ended before discontinued operations
	  	 	9	 	 				 	 	9	 	 			
	 Discontinued operations loss
	  	 	(3	) 	 				 	 	(3	) 	 			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Earnings for the year
	  	 	6	 	 				 	 	6	 	 			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	1	Operating revenues of $53 million to revenue 

	2	Equity income $149 from gross profit to earnings before income tax 

	3	Dividend income $121 million from gross profit to earnings before income tax 

	4	Operation and maintenance $24 million to cost of sales 

	5	General and administrative $38 million from gross profit to results from operating activities 

	6	Impairment loss $103 million from gross profit to earnings before finance costs and income tax 

	7	Project development $133 million from gross profit to results from operating activities 

	8	Depreciation and amortization of $19 million to general and administrative ($14 million) and cost of sales ($5 million) 

	9	Interest and other finance $39 million to finance costs 

	10	Foreign exchange and other income of $2 million to finance costs 

  
 I-13 

 PEMBINA PIPELINE CORPORATION 

PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS RECLASSIFICATIONS 

For the three month period ended March 31, 2017 

UNAUDITED 
  

																	
	 	  	Veresen	 	  	Reclassification
Amounts	 	 	Amount after
Reclassification	 	 	Reference	 
	(in millions of Cdn dollars)	  	 	 	  	 	 	 	 	 	 	 	 
	 	  	2017	 	  	 	 	 	2017	 	 	 	 
	 Revenue
	  				  	 	12	 	 	 	12	 	 	 	1	 
	 Equity income
	  	 	59	 	  	 	(59	) 	 				 	 	2	 
	 Dividend income
	  	 	30	 	  	 	(30	) 	 				 	 	3	 
	 Operating revenues
	  	 	12	 	  	 	(12	) 	 				 	 	1	 
	 Operations and maintenance
	  	 	5	 	  	 	(5	) 	 				 	 	4	 
	 Cost of sales
	  				  	 	5	 	 	 	6	 	 	 	4	 
		  				  	 	1	 	 				 	 	7	 
	 General and administrative
	  	 	9	 	  	 	(9	) 	 				 	 	5	 
	 Impairment loss
	  				  				 				 			
	 Project development
	  	 	16	 	  	 	(16	) 	 				 	 	6	 
	 Depreciation and amortization
	  	 	5	 	  	 	(5	) 	 				 	 	7	 
	 Interest and other finance
	  	 	12	 	  	 	(12	) 	 				 	 	8	 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Gross profit
	  	 	54	 	  	 	(48	) 	 	 	6	 	 			
	 General and administrative
	  				  	 	4	 	 	 	13	 	 	 	7	 
		  				  	 	9	 	 				 	 	5	 
	 Project development
	  				  	 	16	 	 	 	16	 	 	 	6	 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Results from operating activities
	  	 	54	 	  	 	(77	) 	 	 	(23	) 	 			
	 Finance costs
	  				  	 	12	 	 	 	12	 	 	 	8	 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Earnings before equity income, dividend income and income tax
	  	 	54	 	  	 	(89	) 	 	 	(35	) 	 			
	 Equity income
	  				  	 	59	 	 	 	59	 	 	 	2	 
	 Dividend income
	  				  	 	30	 	 	 	30	 	 	 	3	 
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Earnings before income tax
	  	 	54	 	  				 	 	54	 	 			
	 Current taxes
	  	 	3	 	  				 	 	3	 	 			
	 Deferred taxes
	  	 	10	 	  				 	 	10	 	 			
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Income taxes
	  	 	13	 	  				 	 	13	 	 			
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Earnings for the period ended before discontinued operations
	  	 	41	 	  				 	 	41	 	 			
	 Discontinued operations income
	  	 	12	 	  				 	 	12	 	 			
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Earnings for the period
	  	 	53	 	  				 	 	53	 	 			
		  	  
	  
	 	  	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	1	Operating revenues of $12 million to revenue 

	2	Equity income $59 from gross profit to earnings before income tax 

	3	Dividend income $30 million from gross profit to earnings before income tax 

	4	Operation and maintenance $5 million to cost of sales 

	5	General and administrative $9 million from gross profit to results from operating activities 

	6	Project development $16 million from gross profit to results from operating activities 

	7	Depreciation and amortization of $5 million to general and administrative ($4 million) and cost of sales ($1 million) 

	8	Interest and other finance $12 million to finance costs 

  
 I-14 

 PEMBINA PIPELINE CORPORATION 

PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION RECLASSIFICATIONS 

As at March 31, 2017 
 UNAUDITED 

 

																	
	 	  	Veresen	 	 	Reclassification
Amounts	 	 	Amount after
Reclassification	 	 	Reference	 
	(in millions of Cdn dollars)	  	31-Mar
2017	 	 	 	 	 	31-Mar
2017	 	 	 	 
	 ASSETS
	  				 				 				 			
	 Current Assets
	  				 				 				 			
	 Cash and cash equivalents
	  	 	163	 	 				 	 	163	 	 			
	 Accounts receivable and other
	  	 	29	 	 	 	(29	) 	 				 	 	1	 
	 Trade receivable and other
	  				 	 	29	 	 	 	29	 	 	 	1	 
	 Distributions receivable
	  	 	65	 	 				 	 	65	 	 			
	 Assets held for sale
	  	 	779	 	 				 	 	779	 	 			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total current assets
	  	 	1,036	 	 				 	 	1,036	 	 			
	 Non-current assets
	  				 				 				 			
	 Property, plant & equipment
	  	 	315	 	 				 	 	315	 	 			
	 Intangible assets and goodwill
	  				 	 	45	 	 	 	45	 	 	 	2	 
	 Investments in jointly-controlled businesses
	  	 	1,535	 	 				 	 	1,535	 	 			
	 Investments held at cost
	  	 	1,804	 	 				 	 	1,804	 	 			
	 Intangible assets
	  	 	45	 	 	 	(45	) 	 				 	 	2	 
	 Due from jointly-controlled businesses
	  	 	3	 	 	 	(3	) 	 				 	 	3	 
	 Other assets
	  	 	2	 	 	 	(2	) 	 				 	 	3	 
	 Other receivables
	  				 	 	5	 	 	 	5	 	 	 	3	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 TOTAL ASSETS
	  	 	4,740	 	 				 	 	4,740	 	 			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 LIABILITIES
	  				 				 				 			
	 Current liabilities
	  				 				 				 			
	 Accounts payable and other
	  	 	57	 	 	 	(57	) 	 				 	 	4	 
	 Deferred revenue
	  	 	4	 	 	 	(4	) 	 				 	 	5	 
	 Trade payables and accrued liabilities
	  				 	 	57	 	 	 	51	 	 	 	4	 
		  				 	 	4	 	 				 	 	5	 
		  				 	 	(10	) 	 				 	 	6	 
	 Taxes payable
	  				 	 	10	 	 	 	10	 	 	 	6	 
	 Dividends payable
	  	 	26	 	 				 	 	26	 	 			
	 Loans and borrowings
	  				 	 	4	 	 	 	4	 	 	 	7	 
	 Current portion of long-term senior debt
	  	 	4	 	 	 	(4	) 	 				 	 	7	 
	 Liabilities associated with assets held for sale
	  	 	173	 	 				 	 	173	 	 			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total current liabilities
	  	 	264	 	 				 	 	264	 	 			
	 Non-current liabilities
	  				 				 				 			
	 Loans and borrowings
	  				 	 	1,425	 	 	 	1,425	 	 	 	8	 
	 Long-term senior debt
	  	 	1,425	 	 	 	(1,425	) 	 				 	 	8	 
	 Deferred tax liabilities
	  	 	223	 	 				 	 	223	 	 			
	 Other long term liabilities
	  	 	47	 	 	 	(47	) 	 				 	 	9	 
	 Other liabilities
	  				 	 	47	 	 	 	47	 	 	 	9	 
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total Liabilities
	  	 	1,959	 	 				 	 	1,959	 	 			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 EQUITY
	  				 				 				 			
	 Common share capital
	  	 	3,482	 	 				 	 	3,482	 	 			
	 Preferred share capital
	  	 	536	 	 				 	 	536	 	 			
	 Deficit
	  	 	(1,527	) 	 				 	 	(1,527	) 	 			
	 Additional paid-in capital
	  	 	28	 	 				 	 	28	 	 			
	 Accumulated other comprehensive income
	  	 	262	 	 				 	 	262	 	 			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 Total Equity
	  	 	2,781	 	 				 	 	2,781	 	 			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 
	 TOTAL LIABILITIES & EQUITY
	  	 	4,740	 	 				 	 	4,740	 	 			
		  	  
	  
	 	 	  
	  
	 	 	  
	  
	 	 	  
	  
	 

  

	1	Accounts receivable of $29 million to trade receivable and other 

	2	Intangible assets of $45 million to intangible assets and goodwill 

	3	Due from jointly-controlled businesses ($3 million) and other assets ($2 million) to other receivables 

	4.	Accounts payable and other of $57 million to trade payable and other 

	5	Deferred revenue of $4 million to trade payable and other 

	6	Taxes payable of $10 million from accounts payable and other 

	7	Current portion of long term senior debt of $4 million to loans and borrowings (current portion) 

	8	Long term senior debt of $1,425 million to loans and borrowings 

	9	Other long term liabilities of $47 million to other liabilities 

  
 I-15

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00272-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00272-of-00352.parquet"}]]