Pembina Pipeline hosted an investor day in Toronto where it discussed its strategy and operations. Pembina continues to focus its growth strategy toward capturing the growing demand and production of natural gas liquids (NGLs) and crude oil by providing midstream services along its existing infrastructure. To date Pembina has identified close to $4 billion of growth opportunities with $2.4 billion secured and expected to be placed into service in 2013 and 2014. The recent growth announcements are all supported by long-term fee-for-service contracts that should improve the stability of the company's cash flows going forward. The company expects 80% of cash flows to be secured by fee-for-service contracts by 2016, with only 20% exposed to midstream activities and NGL frac spread exposure (down from 30-40% currently). There is an additional $1.6 billion of uncommitted opportunities, some of which could be announced within the next six months. As management delivers on its growth objectives we expect the company will be in a position to increase its dividend at its targeted 3-5%. We maintain our BUY rating and $31 target price but note potential upside to our target price if shipper support is secured for the recent Phase II expansions of the Peace and Northern Pipeline Systems and/or if uncommitted opportunities translate into secured projects.
Our $31.00 target price is derived through a discounted cash flow approach that reflects the net asset value of Pembina's existing operations and from projects announced and currently being developed. Due to the uncertainty of timing, amounts and associated returns, our target price does not reflect any value for unsecured growth projects. We have not imputed a value for the recently announced expansion projects to the Northern NGL and Peace Pipeline Systems but note that our value could improve as definitive shipper agreements are signed and further financial details are provided.