10-KPeriod: FY2022

ENBRIDGE INC Annual Report, Year Ended Dec 31, 2022

Filed February 10, 2023For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

Enbridge Inc. reported its 2022 full-year financial results, showcasing resilience and strategic progress across its diverse energy infrastructure portfolio. The company's core businesses, including Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution and Storage, and Renewable Power Generation, demonstrated stable performance, supported by long-term contracts and regulated frameworks. Despite a significant goodwill impairment charge of $2.5 billion in the Gas Transmission and Midstream segment, primarily due to macroeconomic shifts impacting cost of capital and growth projections, Enbridge maintained a strong operational focus. Strategic initiatives advanced throughout the year, notably the acquisition of Tri Global Energy to bolster renewable power development and increased ownership in the Gray Oak pipeline to strengthen its US Gulf Coast presence. The company also made progress on ESG goals, including advancements in solar self-power projects and Indigenous partnerships. Enbridge remains committed to its investor value proposition of predictable cash flows and growing dividends, supported by disciplined capital allocation, a strong balance sheet, and a forward-looking strategy that balances conventional energy with investments in lower-carbon solutions.

Key Highlights

  • 1Enbridge reported continued operational strength across its Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution and Storage, and Renewable Power Generation segments.
  • 2The company recorded a significant goodwill impairment of $2.5 billion related to its Gas Transmission reporting unit, largely influenced by macroeconomic factors like rising interest rates.
  • 3Strategic acquisitions and investments were made, including the acquisition of Tri Global Energy (TGE) to expand renewable power development and an increased interest in the Gray Oak pipeline, enhancing its US Gulf Coast strategy.
  • 4Enbridge maintained a strong focus on ESG goals, reporting progress on emissions reductions, Indigenous reconciliation, and diversity and inclusion initiatives.
  • 5The company demonstrated financial discipline, completing substantial debt issuances and renewing credit facilities, while maintaining a strong liquidity position and affirmed investment-grade credit ratings.
  • 6A consistent commitment to shareholder returns was highlighted by a 3.2% increase in the quarterly common share dividend, marking 28 consecutive years of dividend increases.
  • 7The company is actively engaged in developing lower-carbon energy platforms, including investments in Carbon Capture and Storage (CCS), Hydrogen (H2), and Renewable Natural Gas (RNG).

Frequently Asked Questions

In 2022, Enbridge reported earnings attributable to common shareholders of $2,589 million ($1.28 per share), a decrease from $5,816 million ($2.87 per share) in 2021. This decrease was largely due to non-operating factors, including a $2.5 billion goodwill impairment in the Gas Transmission segment, unrealized derivative fair value losses of $1,265 million, and asset impairment losses. Operationally, higher throughput in Liquids Pipelines and stronger commodity prices benefiting Gas Transmission and Midstream investments were partially offset by provisions related to the Mainline interim tolls and increased interest and depreciation expenses.

Enbridge is actively investing in lower-carbon energy platforms as part of its strategy to bridge to a cleaner energy future. This includes investments in renewable power generation (wind and solar), Carbon Capture and Storage (CCS), Hydrogen (H2), and Renewable Natural Gas (RNG). The acquisition of Tri Global Energy (TGE) in 2022 significantly expanded its renewable power development pipeline in the US. The company is also progressing lower-carbon initiatives across its existing businesses, such as blending hydrogen and RNG into its gas systems and developing carbon capture hubs.

Enbridge's strategy is founded on delivering predictable cash flows and a growing stream of dividends. The company prioritizes maintaining a strong balance sheet with investment-grade credit ratings and access to capital markets. It aims to fund its secured capital program through internally generated cash flow and available balance sheet capacity, minimizing the need for new equity. Enbridge remains committed to disciplined capital allocation, focusing on low capital intensity growth, modernization, and value-enhancing opportunities, while also returning capital to shareholders through dividends and share repurchases.

Enbridge highlighted several key risks, including those related to climate change (physical and transition risks), operational disruptions or catastrophic events (weather, accidents, cyber threats), regulatory and legal risks (permitting, environmental compliance, litigation), market risks (commodity price volatility, competition), and risks associated with project execution and supply chain challenges. The company also emphasized the importance of maintaining its workforce and managing cybersecurity threats.