Highlights:

— Subsequent to the end of the quarter, Pembina Pipeline announced the pending acquisition of the Cutbank complex, for CAD300 million in an all cash transaction with Talisman Energy Canada (Talisman). The company estimates the transaction, upon closing (scheduled for early June 2009), to be accretive to distributable cash flow per trust unit and expects the acquisition will generate further net operating income of CAD40 million on a yearly basis. This acquisition presents the company’s midstream business unit with a strategic entry point into the natural gas gathering and processing business with assets situated in the Deep basin region of the Western Canadian Sedimentary basin. Further, the company has arranged committed financing for the acquisition.

— Subsequent to the end of the quarter, the company has gained a CAD75 million non-revolving credit facility from a Canadian chartered bank. The credit facility is for a term of five years at a fixed rate of about 6.0%. The net proceeds of the credit facility are to be used for the refinancing of CAD75 million floating rate notes coming due on June 22, 2009, and may also be used for other general corporate purposes at the company’s discretion.

— Pembina Pipeline’s three business units reported consolidated revenue of CAD116.1 million during the quarter, up from CAD106.3 million during the year-ago quarter.

— Both net operating income and EBITDA increased by CAD0.8 million over the first three months of 2008.

— Distributed cash of CAD53.2 million (CAD0.39 per trust unit) during the quarter, compares to CAD47.8 million (CAD0.36 per Trust Unit), in the year-ago quarter

— During the quarter, Pembina Pipeline’s board approved an increase of the Nipisi pipeline project that is anticipated to raise ultimate throughput capacity to 200,000 barrels per day (bbls/d) from the original 100,000 bbls/d. As a result, the company’s capital expenditure approximation for the Nipisi and Mitsue pipeline projects was altered to CAD440 million from the original CAD400 million. Pending regulatory approval, Pembina Pipeline anticipates building on both pipeline projects to commence late 2009 and be in service by mid 2011

— Starting with Pembina Pipeline’s distribution which is anticipated to be declared in June 2009 and paid in July 2009, the company anticipates changing its distribution record date to the 25th day of each month to better facilitate the administration of Pembina Pipeline’s premium distribution, distribution reinvestment and optional unit purchase plan (DRIP). The distribution payment date, which is the 15th day of the calendar month following the distribution record date, will remain unchanged.

— The company’s extensive network of pipelines in Alberta and BC provides safe, dependable, and cost effective transportation service to customers in Western Canada. The conventional pipeline business unit represents Pembina Pipeline’s traditional core business. These strategically situated pipeline assets are anticipated to produce stable and predictable cash flows

During the quarter ended March 31, 2009, the company’s conventional pipelines collectively transported an average of 421,900 bbls/d, a reduction of 8% from the first quarter of 2008.

The Alberta pipelines transported an average of 401,400 bbls/d during the first quarter, 8% lower than volumes transported during the first quarter of 2008. This decline is in part due to reduced Nisku production on the Drayton Valley pipeline, which resulted from lower production associated with the current low commodity price environment. Should this trend continue, Pembina Pipeline estimates that this decrease in production could result in a decline of 4,000 bbls/d annualized. The Alberta pipelines were also impacted by decreased trucked receipts as producers move volumes to alternative delivery points offering higher near term netbacks. Extended maintenance activities at connected gas plants impacted NGL receipts on the Alberta pipelines in the first quarter of 2009. Pembina Pipeline expects that these volumes will regularize as maintenance activities subside in the coming quarter.

Throughput on the company’s Western system averaged 20,500 bbls/d during the first quarter of 2009, a 14% decline from the previous year. This decrease in throughput is largely a result of declining oil production in Northeast BC, and a decline in trucked volumes. The BC gathering pipelines transported an average of 25,330 bbls/d over the three months ended March 31, 2009, as compared to 26,244 bbls/d a year earlier.

Revenue in the first quarter of 2009 was about CAD66.1 million, a modest decline from CAD67.1 million from the year-ago quarter.

The Alberta systems recorded revenue of CAD56.6 million during the quarter, 1% lower than the same period of the previous year. This decrease in revenue is mainly a result of decreased throughput and the associated decrease in toll revenue.

Revenue on the provincially regulated BC pipelines, which is mainly based on flow through of operating expenses and a return on invested capital, was CAD9.5 million in the first quarter of 2009, decreased 3% from the first quarter of 2008 due to lower operating expenses.

Operating expenses relating to the company’s integrity and environmental program incurred during the first quarter of 2009 on the conventional systems contributed to a 18.7% quarter-over-quarter raise in operating expenses, to CAD32.4 million. This raise is mainly attributable to the timing of pipeline inspection digs on the Peace system, which accounts for about CAD4.2 million of the CAD5.1 million increase during the first quarter. With the completion of these digs, Pembina Pipeline anticipates operating expenses to normalize through the balance of 2009. Net operating income reduced 15% over the year-ago quarter of 2008 to CAD33.7 million during the first quarter of 2009, mainly as a result of the timing of operating expenses.

The company continues to reinvest capital in its infrastructure to make sure the safety and reliability of its pipeline assets and to benefit from accretive opportunities as they arise. During the first quarter of 2009, capital investment of about CAD9.6 million was focused on new connections and upgrades on the conventional system. Pembina Pipeline anticipates that these new connections, when fully commissioned, will give incremental volumes and revenue to Pembina Pipeline’s conventional system.

The company has 775,000 barrels per day of fully contracted crude oil transportation capacity in three distinct pipelines serving customers in the Athabasca oil sands region; the Syncrude pipeline which provides dedicated service to Syncrude Canada Ltd.; the Cheecham Pipeline which delivers synthetic crude oil from the Syncrude Pipeline to a third party facility near Cheecham, Alberta; and, the Horizon Pipeline which was concluded in July of 2008 and which provides dedicated service to Canadian Natural Resources Limited’s (CNRL) Horizon oil sands project. Revenue generated by these fully contracted pipelines is independent of throughput and provides for the full recovery of operating expenses.

Syncrude Pipeline

The Syncrude pipeline has a transportation capacity of 389,000 barrels per day and is fully contracted to the Syncrude owners. Net operating income generated by the Syncrude pipeline during the quarter of CAD7.9 million is reliable year-over-year.

Cheecham Pipeline

The Cheecham pipeline has a capacity of 136,000 barrels per day and started operation in 2006. The pipeline has a 25-year contract and is fully contracted to shippers. The net operating income was CAD1.5 million during the first quarter, which is consistent with the first quarter of 2008.