Alberta-based Pembina Pipeline Corp. (NYSE: PBA, TSX: PPL) is easily one of the companies subscribers ask about most often.

Of course, these inquiries aren’t just to keep tabs on one of Canada’s premier pipeline companies. They’re prompted by understandable anxiety over the steep decline in Pembina’s share price since the stock hit an all-time high last September.

Consequently, we’re using this week’s article to give subscribers a deeper dive on the stock than we can normally do in the monthly issue, even though the company isn’t scheduled to report second-quarter earnings until Aug. 6.

First of all, we still consider Pembina a solid long-term holding. And we believe the company can successfully weather the downturn in the energy sector.

In doing a damage assessment, at least as far as investment performance is concerned, it’s important to remember that when you invest in foreign securities you need to be mindful of the effect the exchange rate has on your returns. That’s the case even if you hold the U.S. listing of a foreign stock.

As U.S. investors, the Canadian dollar’s ascendance during the energy boom helped enhance our returns. Indeed, the loonie managed to climb high enough to trade above parity with the U.S. dollar for nearly two years, even while the average dolt still derided the currency as Monopoly money.

But the dolts can settle into complacency once again: The Canadian dollar has fallen sharply over the past two years, with the currency’s peak at USD1.06 now a distant memory.

The decline in the exchange rate began to accelerate once it became clear that, in terms of monetary policy, each country’s central bank was headed in the opposite direction.

First, the U.S. Federal Reserve gradually withdrew its extraordinarily stimulus–the third round of its so-called quantitative easing, or QE3. And now the Fed is making noise about when to finally raise short-term rates off the zero bound.

Meanwhile, the Bank of Canada (BoC) had been one of the few central banks in the developed world to take a hawkish stance toward monetary policy in the years following the Global Financial Crisis.

But the country’s stagnating economy quickly forced the BoC to abandon its upward rate bias.

One aim of this shift in policy was to cause the currency to depreciate in order to boost export activity. Canada’s central bank hopes a lower exchange rate will spur demand for Canadian goods in the U.S., which absorbs about three-quarters of the country’s exports.

After holding short-term rates at 1% for more than four years, the economic shock from crude oil’s collapse compelled the bank to act. In January, the BoC announced a surprise quarter-point rate cut. And earlier this week, it lowered rates by another quarter point.

These moves have weakened the loonie, which currently trades just above USD0.77. And it could very well head lower over the next year.

Right now, assuming the Fed finally raises rates, while the BoC has another rate cut in the offing, then the Canadian dollar’s ultimate bottom could be as low as USD0.70, or 9.1% lower than where it is presently.

So how does all of that relate back to Pembina?

Well, the stock is down about 35% in U.S. dollar terms since its September high. But the Canadian dollar has dropped 16.2% over that same period.

In other words, the falling exchange rate is making Pembina look like it’s doing worse than it actually is.

In fact, it should be of some comfort to learn that Pembina’s performance over that period is more or less in line with its U.S. midstream peers. The Alerian MLP Index, whose constituents are mostly pipeline companies like Pembina, has declined 25.3% since early September. Over that same period, Pembina has fallen 24.1% in Canadian dollar terms.

Of less comfort to some, but still worth noting nonetheless, is the fact that Pembina has generated a total return of 436.2% since it was first added to our portfolio back in March 2005. By contrast, the Alerian MLP Index returned 207.3% over that same period, while the S&P 500 returned 111.0%.

I mention those figures not to rub salt in the wounds of those who bought into Pembina more recently, but rather as a clear example that it’s well worth keeping your eyes on the long-term prize: the dividend growth and share-price appreciation that will occur once the energy sector goes from bust back to boom, not to mention any gains resulting from a rise in the exchange rate.

And as one of Canada’s biggest pipeline companies, Pembina has what it takes to endure. With a 10,450-kilometer network of pipelines, the $10.6 billion company moves roughly 50% of Alberta’s conventional crude and 30% of Western Canada’s natural gas liquids.

Pembina’s assets are well situated in many of Canada’s most prolific energy plays. And it has nearly CAD6 billion in secured and committed growth projects underway through 2017. That means there’s significant growth ahead, which should generate sufficient cash flows to support the dividend.

One of our favorite aspects of midstream companies is how they approach their contracts with customers. Because building a pipeline and other energy infrastructure is so capital intensive, Pembina and other pipeline operators typically have contracts in place before construction even commences.

And once projects enter service, most of the contracts supporting them are long term–10 years or even longer. They also provide their services for fixed fees, or what Pembina refers to as fee-for-service, so the company does not have direct exposure to the volatile prices of the commodities it transports.

Even better, many projects have take-or-pay provisions, which means Pembina gets paid even if a customer fails to fully utilize its contracted capacity. That’s a crucial detail when you’re dealing with a difficult operating environment, such as the one we’re in presently.

Looking ahead, Pembina is already making great strides toward further de-risking its operations. By 2018, the company expects that 82% of EBITDA (earnings before interest, taxation, depreciation and amortization) will come from fee-for-service projects, up from 64% in 2014.

Although a majority of the company’s operations are insulated from commodities, it does have some direct exposure to energy prices, particularly in its midstream gathering-and-processing business, which resulted in a soft first quarter.

But barring another economic shock that further depresses energy prices, Pembina’s weak performance should be front-loaded toward the first half of the year, with improvement thereafter.

Analysts expect revenue to decline by 19% this year, to CAD4.9 billion, but they forecast it to jump 26%, to CAD6.2 billion next year.

Sentiment remains strongly bullish among analysts, at 14 “buys,” three “holds,” and one “sell.” The consensus 12-month target price is $38.90, which suggests potential appreciation of 25% above the current share price.