CALGARY, ALBERTA — (Marketwire) — 11/07/12 — HIGHLIGHTS
(all financial figures are unaudited and presented in Canadian dollars)
Enbridge Inc. (TSX: ENB) (NYSE: ENB) – “As we approach the end of 2012 with nine-month adjusted earnings of $922 million, or $1.20 per share, and a strong fourth quarter expected, we remain on track to achieve full year adjusted earnings per share well within our guidance range of $1.58 to $1.74,” said Al Monaco, President and Chief Executive Officer (CEO). “With $18 billion in corporate-wide commercially secured growth projects today, we expect strong average annual earnings per share growth of 10% to 2016. Further, an additional $12 billion of highly probable, unsecured projects would accelerate earnings per share growth to 12%-plus over the next five years, with continued momentum into the latter part of the decade.”
“North America is undergoing a transformation in crude oil and natural gas production, which is driving the need for significant new energy infrastructure. Enbridge is in the middle of that transformation and we–re uniquely positioned to benefit from new and emerging opportunities in energy infrastructure development. Our plate is very full and we expect this activity will continue to drive industry-leading growth. This exceptional array of attractive investments, coupled with our access to low-cost capital, supports our positive five-year growth outlook. Beyond that, we are gaining confidence that we will be able to sustain that growth through to the end of the decade given embedded growth in returns on secured investment opportunities, and the expected contribution from our new growth platforms, such as Canadian Midstream and electric power.”
2012 results reflected unrealized non-cash mark-to-market accounting impacts related to the comprehensive long-term economic hedging program Enbridge Inc. (Enbridge or the Company) has put in place to mitigate exposures to interest rate variability and foreign exchange, as well as commodity prices. These kinds of short-term non-cash impacts to reported earnings result from Enbridge–s hedging program, which the Company believes over the long-term will support reliable cash flows and dividend growth.
Mr. Monaco became President and CEO October 1, 2012, succeeding Patrick D. Daniel on his retirement. Mr. Monaco and the Enbridge leadership team presented the Company–s strategic plan and growth outlook to the investment community in early October, outlining the three priorities that underpin that plan.
“Our first priority is to focus on the safety, reliability and environmental sustainability of our systems. We are committed to achieving industry leadership in all of these areas,” said Mr. Monaco. “Second is to execute our slate of growth projects on time and on budget, adding value for our customers and delivering significant earnings and dividends growth for our shareholders. Key to achieving this priority will be to maintain our strong financial position. With confidence in our growth rate for the medium term, our third priority is to extend the growth rate beyond 2016 through our existing and new business platforms.”
Over the third quarter of 2012, Enbridge continued to add to its slate of growth opportunities. In Liquids Pipelines, Enbridge received regulatory approval to construct the Woodland Pipeline Extension project, a 36-inch diameter 385-kilometre (228-mile) line that will effectively twin Enbridge–s existing Waupisoo Pipeline. The Woodland Pipeline Extension project is estimated to require, subject to approval of final commercial arrangements, an investment of approximately $1.0 billion to $1.4 billion for an initial capacity of 400,000 barrels per day (bpd), expandable to 800,000 bpd. Enbridge also announced an agreement for a $0.2 billion expansion of the existing infrastructure at its Athabasca Terminal to accommodate the incremental bitumen volumes from Suncor Energy Inc.–s (Suncor) Firebag 3 and 4 developments.
“The scale and scope of our existing regional infrastructure enables us to offer oil sands and Bakken producers cost-effective and timely regional transportation and terminaling solutions,” said Mr. Monaco. “We also continue to work closely with our customers to meet their needs for access to new downstream markets, notably through our Gulf Coast Access and Eastern Access programs, and to enhance market connectivity which will help address significant North American price discounting.”
In September, the Joint Review Panel (JRP) hearings on the Northern Gateway Pipeline project entered the formal questioning phase allowing for registered intervenors and Northern Gateway panel experts to be cross-examined on the project, under oath and in public, to fully investigate issues related to the project.
“The regulatory process is intended to consider all points of view and address concerns,” said Mr. Monaco. “All of Northern Gateway–s plans and assertions – whether environmental, social or economic – are being fully tested. We remain confident the JRP will conclude that Northern Gateway is in Canada–s national interest.”
Enbridge announced in October that it has entered into a midstream services relationship with Encana Corporation (Encana) to develop gas gathering and compression facilities in the Peace River Arch (PRA) region in northwest Alberta. Enbridge also announced it has agreed with the other partners of the Cabin Gas Plant (Cabin) development to defer the commissioning of Cabin Phase 1 and construction of Cabin Phase 2. Starting in December 2012, Enbridge expects to begin receiving fees for its investment made to date in Cabin, including costs expended on Phase 2 of the plant facilities.
“We expect our investment in Cabin and PRA will exceed the previous level of capital committed to Cabin Phases 1 and 2,” said Mr. Monaco. “The investment has the same attractive commercial underpinning as our original Cabin investment.”
On November 6, 2012, Enbridge announced it has been selected by Anadarko Petroleum Corporation (Anadarko) to build, own and operate a crude oil pipeline in the Gulf of Mexico to connect the proposed Heidelburg development, operated by Anadarko, to an existing third party pipeline system. Construction of the pipeline, which is expected to be operational by 2016, is subject to finalization of definitive agreements and sanction of the development by Anadarko and its project co-owners.
“Enbridge has a significant presence in the United States Gulf, transporting approximately 40% of deepwater natural gas production. The Heidelburg lateral pipeline will be our second crude oil pipeline in the Gulf contributing to the diversification of our offshore business,” said Mr. Monaco.
In Gas Distribution, Enbridge announced investment of up to $0.6 billion to expand Enbridge Gas Distribution–s (EGD) natural gas distribution system in the Greater Toronto Area (GTA) to accommodate growth in the GTA, and continue the safe and reliable delivery of natural gas to current and future customers.
“Our proposed GTA project reflects the changing gas-supply landscape and represents the most significant upgrade to our distribution system in 20 years. The project will enable us to serve current and anticipated growth in our customers– needs, enhance our flexibility to avoid customer impacts due to disruption of physical supply, and provide options to access additional supply sources for our customers,” said Mr. Monaco.
Over the third quarter, Enbridge continued to build liquidity in support of its five-year funding plan, issuing $850 million in Preference Shares and a $100 million Century Bond with a term to maturity of 100 years through its subsidiary, Enbridge Pipelines Inc., the second Century Bond ever issued by a Canadian corporation.
“We are the largest issuer of rate reset preference shares with $2.3 billion issued this year and $3.3 billion issued since July 2011. With a 4% yield, this is a very low cost and attractive source of capital for us,” said Mr. Monaco.
Enbridge also advanced its sponsored vehicle strategy announcing on October 25, 2012 an agreement with Enbridge Income Fund (the Fund) to transfer a group of crude oil storage, wind power and solar power assets valued at $1.2 billion to the Fund. The transfer is subject to approval by the public shareholders of Enbridge Income Fund Holdings Inc. (ENF) at a meeting to be held December 7, 2012, and to the closing of a $222 million public offering of subscription receipts by ENF.
“The Enbridge sponsored investments provide us with a supplementary source of debt and equity funding,” said Mr. Monaco. “With this transfer, Enbridge will receive initial net cash proceeds from the transaction of $222 million and a further $582 million when the Fund raises additional public term debt to refinance a bridge loan provided by Enbridge in connection with this transaction.”
THIRD QUARTER 2012 OVERVIEW
For more information on Enbridge–s growth projects and operating results, please see the Management–s Discussion and Analysis (MD&A) which is filed on SEDAR and EDGAR and also available on the Company–s website at .
DIVIDEND DECLARATION
On October 24, 2012, the Enbridge Board of Directors declared the following quarterly dividends. All dividends are payable on December 1, 2012 to shareholders of record on November 15, 2012.
CONFERENCE CALL
Enbridge will hold a conference call on Wednesday, November 7, 2012 at 9:00 a.m. Eastern Time (7:00 a.m. Mountain Time) to discuss the third quarter 2012 results. Analysts, members of the media and other interested parties can access the call at (617) 213-4850 or toll-free at 1-888-679-8038 using the access code of 82312523. The call will be audio webcast live at . A webcast replay and podcast will be available approximately two hours after the conclusion of the event and a transcript will be posted to the website within 24 hours. The replay at toll-free 1-888-286-8010 or (617) 801-6888 (access code 34744052) will be available until November 14, 2012.
The conference call will begin with presentations by the Company–s Chief Executive Officer and Chief Financial Officer, followed by a question and answer period for investment analysts. A question and answer period for members of the media will then immediately follow.
The unaudited interim Consolidated Financial Statements and MD&A, which contain additional notes and disclosures, are available on the Enbridge website at .
Enbridge Inc., a Canadian company, is a North American leader in delivering energy and one of the Global 100 Most Sustainable Corporations. As a transporter of energy, Enbridge operates, in Canada and the United States, the world–s longest crude oil and liquids transportation system. The Company also has a significant and growing involvement in the natural gas gathering, transmission and midstream businesses, and an increasing involvement in power transmission. As a distributor of energy, Enbridge owns and operates Canada–s largest natural gas distribution company, and provides distribution services in Ontario, Quebec, New Brunswick and New York State. As a generator of energy, Enbridge has interests in close to 1,000 megawatts of renewable and alternative energy generating capacity and is expanding its interest in wind and solar energy, geothermal and hybrid fuel cells. Enbridge employs more than 10,000 people, primarily in Canada and the United States and is ranked as one of Canada–s Greenest Employers and one of Canada–s Top 100 Employers for 2013. Enbridge is included on the 2012/2013 Dow Jones Sustainability World Index and the Dow Jones Sustainability North America Index and is also a constituent of the 2012/2013 FTSE4Good Index Series. Enbridge is also featured on the 2012 Carbon Disclosure Leadership Index. Our United States affiliate, Enbridge Energy Partners, is ranked as one of the 100 Most Trustworthy Companies in America. Enbridge–s common shares trade on the Toronto and New York stock exchanges under the symbol ENB. For more information, visit . None of the information contained in, or connected to, Enbridge–s website is incorporated in or otherwise part of this news release.
Forward-Looking Information
Forward-looking information, or forward-looking statements, have been included in this news release to provide the Company–s shareholders and potential investors with information about the Company and its subsidiaries and affiliates, including management–s assessment of Enbridge–s and its subsidiaries– future plans and operations. This information may not be appropriate for other purposes. Forward-looking statements are typically identified by words such as “anticipate”, “expect”, “project”, “estimate”, “forecast”, “plan”, “intend”, “target”, “believe” and similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information or statements included or incorporated by reference in this document include, but are not limited to, statements with respect to: expected earnings or adjusted earnings; expected earnings or adjusted earnings per share; expected costs related to projects under construction; expected in-service dates for projects under construction; expected capital expenditures; estimated future dividends; and expected costs related to leak remediation and potential insurance recoveries.
Although Enbridge believes that these forward-looking statements are reasonable based on the information available on the date such statements are made and processes used to prepare the information, such statements are not guarantees of future performance and readers are cautioned against placing undue reliance on forward-looking statements. By their nature, these statements involve a variety of assumptions, known and unknown risks and uncertainties and other factors, which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Material assumptions include assumptions about: the expected supply and demand for crude oil, natural gas and natural gas liquids (NGL); prices of crude oil, natural gas and NGL; expected exchange rates; inflation; interest rates; the availability and price of labour and pipeline construction materials; operational reliability; customer project approvals; maintenance of support and regulatory approvals for the Company–s projects; anticipated in-service dates; and weather. Assumptions regarding the expected supply and demand of crude oil, natural gas and NGL, and the prices of these commodities, are material to and underlie all forward-looking statements. These factors are relevant to all forward-looking statements as they may impact current and future levels of demand for the Company–s services. Similarly, exchange rates, inflation and interest rates impact the economies and business environments in which the Company operates, may impact levels of demand for the Company–s services and cost of inputs, and are therefore inherent in all forward-looking statements. Due to the interdependencies and correlation of these macroeconomic factors, the impact of any one assumption on a forward-looking statement cannot be determined with certainty, particularly with respect to expected earnings or adjusted earnings and associated per share amounts, or estimated future dividends. The most relevant assumptions associated with forward-looking statements on projects under construction, including estimated in-service date, and expected capital expenditures include: the availability and price of labour and construction materials; the effects of inflation and foreign exchange rates on labour and material costs; the effects of interest rates on borrowing costs; and the impact of weather and customer and regulatory approvals on construction schedules.
Enbridge–s forward-looking statements are subject to risks and uncertainties pertaining to operating performance, regulatory parameters, project approval and support, weather, economic and competitive conditions, exchange rates, interest rates, commodity prices and supply and demand for commodities, including but not limited to those risks and uncertainties discussed in this news release and in the Company–s other filings with Canadian and United States securities regulators. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent and Enbridge–s future course of action depends on management–s assessment of all information available at the relevant time. Except to the extent required by law, Enbridge assumes no obligation to publicly update or revise any forward-looking statements made in this news release or otherwise, whether as a result of new information, future events or otherwise. All subsequent forward-looking statements, whether written or oral, attributable to Enbridge or persons acting on the Company–s behalf, are expressly qualified in their entirety by these cautionary statements.
Non-GAAP Measures
This news release contains references to adjusted earnings/(loss), which represent earnings or loss attributable to common shareholders (earnings/(loss)) adjusted for unique or unusual, non-recurring or non-operating factors on both a consolidated and segmented basis. These factors, referred to as adjusting items, are reconciled and discussed in the financial results sections for the affected business segments. Management believes that the presentation of adjusted earnings/(loss) provides useful information to investors and shareholders as it provides increased transparency and predictive value. Management uses adjusted earnings/(loss) to set targets, assess performance of the Company and set the Company–s dividend payout target. Adjusted earnings/(loss) and adjusted earnings/(loss) for each of the segments are not measures that have a standardized meaning prescribed by U.S. GAAP and are not considered GAAP measures; therefore, these measures may not be comparable with similar measures presented by other issuers.
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