10-QPeriod: Q3 FY2018

ENBRIDGE INC Quarterly Report for Q3 Ended Sep 30, 2018

Filed November 2, 2018For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

Enbridge Inc. reported its financial results for the third quarter and nine months ended September 30, 2018. The company experienced a significant drop in earnings attributable to common shareholders for the quarter, largely due to a substantial goodwill impairment charge of $1,019 million related to the divestiture of its Canadian natural gas gathering and processing businesses. Despite this, operational performance showed strength, with increased contributions from the Liquids Pipelines segment driven by higher tolls and throughput, and growth in Gas Distribution due to expansion projects and rate base increases. The nine-month period also saw impacts from asset monetization activities and derivative fair value adjustments. The company continued to advance its corporate structure simplification by entering into definitive agreements to acquire outstanding public securities of its sponsored vehicles (SEP, EEP, EEQ, and ENF). The company provided updates on significant events including the closure of the sale of its Canadian natural gas gathering and processing businesses' provincially regulated facilities, the sale of a 49% interest in its renewable assets, and the sale of Midcoast Operating, L.P. Enbridge also highlighted ongoing regulatory and legal matters, including the BC Pipeline rupture and the Minnesota Public Utilities Commission's approval for the U.S. Line 3 Replacement Program. Liquidity remains strong, supported by substantial committed credit facilities and cash flow from operations.

Key Highlights

  • 1Reported a significant goodwill impairment of $1,019 million in the third quarter due to the classification of Canadian natural gas gathering and processing businesses as held for sale.
  • 2Earnings attributable to common shareholders decreased significantly in Q3 2018 compared to Q3 2017, primarily due to the goodwill impairment charge, partially offset by stronger contributions from Liquids Pipelines and Gas Distribution.
  • 3Completed the sale of provincially regulated Canadian natural gas gathering and processing facilities for approximately $2.5 billion.
  • 4Closed the sale of a 49% interest in renewable assets for $1.75 billion and the sale of Midcoast Operating, L.P. for $1.4 billion.
  • 5Advanced plans to simplify its corporate structure by entering into definitive agreements to acquire outstanding public securities of its sponsored vehicles (SEP, EEP, EEQ, ENF).
  • 6Maintained a strong liquidity position with $10.87 billion available under committed credit facilities as of September 30, 2018.
  • 7The BC Pipeline T-South system experienced a rupture in October 2018, leading to temporary shutdowns, with both pipelines subsequently returned to service at a reduced pressure.

Frequently Asked Questions

The significant decrease in earnings attributable to common shareholders for the three months ended September 30, 2018, was primarily driven by a goodwill impairment charge of $1,019 million related to the classification of Enbridge's Canadian natural gas gathering and processing businesses as held for sale. Other factors included losses from asset monetization transactions, partially offset by stronger operational performance in the Liquids Pipelines and Gas Distribution segments.

Enbridge closed the sale of the provincially regulated facilities of its Canadian natural gas gathering and processing businesses for approximately $2.5 billion. Additionally, the company sold a 49% interest in its renewable assets for $1.75 billion and completed the sale of Midcoast Operating, L.P. for $1.4 billion.

During the third quarter, Enbridge announced and entered into definitive agreements to acquire all outstanding public securities of its sponsored vehicles: Spectra Energy Partners (SEP), Enbridge Energy Partners (EEP), Enbridge Energy Management (EEQ), and Enbridge Income Fund (ENF). These transactions are valued collectively at approximately $15 billion and are targeted to close in the fourth quarter of 2018, subject to approvals and closing conditions.

Enbridge maintains a strong liquidity position, with $10.87 billion available under committed credit facilities as of September 30, 2018. The company also benefits from cash generated from operations. During the first nine months of 2018, Enbridge issued long-term debt totaling approximately $3.5 billion and repaid approximately $3.7 billion in long-term debt, indicating active management of its debt portfolio.