Combined energy infrastructure company will be one of Canada’s largest

(All financial figures are approximate and in Canadian dollars unless otherwise noted.)

Pembina Pipeline Corp. has agreed to acquire all of the issued and outstanding common shares of Provident Energy Ltd.

Provident shareholders will receive 0.425 of a Pembina share for each Provident share held, representing a 24.7% premium to Provident's closing share price of C$9.51 on January 13, 2012.

Based on the 20-day weighted average TSX share price of Pembina of $29.11, the Provident Exchange Ratio represents a premium of 26.2% to Provident's 20-day weighted average TSX share price of $9.80.

Based on the Provident Exchange Ratio and Pembina's share price quoted above, the combined company will have a market capitalization of C$7.9 billion and total enterprise value of C$10 billion, making it one of the largest publicly traded energy infrastructure companies in Canada.

"The proposed transaction integrates our energy transportation and gas processing businesses with Provident's suite of services including natural gas liquids (NGL) extraction, fractionation, storage, transportation and logistics, and will significantly accelerate our growth capital plans for these business segments. Our expanded footprint will provide greater access to natural gas liquids markets across North America, and will allow us to offer customers a significantly expanded spectrum of energy services," said Bob Michaleski, president and CEO of Pembina.

"This is a logical transaction that leverages off Provident's strong growth as a pure play midstream business," said Doug Haughey, president and CEO of Provident. "

In addition to creating one of the largest publicly traded energy infrastructure companies in Canada, the transaction exposes the combined company to key growth areas including Montney, Duvernay, Alberta Deep Basin, Pelican Lake heavy oil, Athabasca oil sands, Cardium, Swan Hills, Bakken, Marcellus, and Utica.

The larger entity will also be capable of pursuing more complex growth projects at an accelerated pace, said Pembina. The combined capital program of approximately $700 million of announced spending in 2012 (Pembina: $550 million, Provident: $150 million) will be allocated to major near-term projects including:

•    Saturn and Resthaven liquids extraction facilities;
•    Peace NGL pipeline expansion;
•    Redwater liquids storage development;
•    Redwater fractionator capacity expansion;

Due to the continued success of producers drilling for liquids rich natural gas and the increase in field liquids extraction, the amount of NGL being produced in the Western Canadian Sedimentary Basin has increased significantly. To meet the growing need of producers in the region, Pembina expects that on closing of the proposed transaction, it will begin development of a new 65,000 bpd fractionator at Provident's Redwater site, which is anticipated to be in-service by mid 2014 pending continued customer support and subject to required regulatory and environmental approvals.

The combined entity will be led by Bob Michaleski, president and CEO of Pembina, and a combination of Pembina's and Provident's executive teams. Due to the complementary nature of the businesses, Pembina plans to make employment offers to substantially all of Provident's employees.

Following a successful completion of the proposed transaction, Grant D. Billing and Jeffrey T. Smith, current members of the Provident board of directors, have advised that they will accept positions on the Pembina Board. Billing is currently chairman and formerly CEO of Superior Plus Corp. Smith is an independent businessman and is currently a director of Pace Oil & Gas Ltd.  Randy Findlay, currently a director of both Pembina and Provident, will continue as a director of Pembina.

Scotia Waterous Inc. is acting as financial advisor to Pembina with respect to the proposed transaction. Blake, Cassels & Graydon LLP is acting as Canadian legal advisor to Pembina and Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as US legal advisor to Pembina. TD Securities Inc. is acting as financial advisor to Provident. Norton Rose Canada LLP is acting as Canadian legal advisor to Provident and Andrews Kurth LLP and Dorsey and Whitney LLP are acting as US legal advisors to Provident.