10-QPeriod: Q1 FY2019

ENBRIDGE INC Quarterly Report for Q1 Ended Mar 31, 2019

Filed May 10, 2019For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

Enbridge Inc. reported strong first-quarter 2019 results, with earnings attributable to common shareholders rising significantly to $1.9 billion, or $0.94 per diluted share, compared to $445 million, or $0.26 per diluted share, in the prior year. This substantial improvement was driven by several key factors, including the absence of prior-year impairments and losses related to asset sales, a significant positive swing in derivative fair value adjustments, and strong operational performance across its Liquids Pipelines and Gas Transmission & Midstream segments. The company also benefited from higher volumes, increased tolls, and contributions from new assets placed in service. While the company faces ongoing regulatory and legal matters, including the Line 3 replacement project in Minnesota, its robust financial performance and strategic growth initiatives position it well for continued value creation.

Key Highlights

  • 1Net earnings attributable to common shareholders increased to $1.9 billion ($0.94/share) in Q1 2019 from $445 million ($0.26/share) in Q1 2018.
  • 2EBITDA for the Liquids Pipelines segment saw a significant increase driven by higher tolls and throughput, alongside favorable derivative impacts.
  • 3The Gas Transmission and Midstream segment experienced a substantial EBITDA increase, primarily due to the absence of a prior-year impairment charge related to Midcoast Operating, L.P. (MOLP).
  • 4New contributions from gas transmission assets placed in service in 2018 positively impacted earnings.
  • 5The Line 3 replacement program in Minnesota is facing permitting delays, leading to an expected in-service date in the second half of 2020, with potential for cost overruns.
  • 6Enbridge's financial position remains solid with $7.24 billion in net available liquidity.
  • 7The company declared a quarterly dividend of $0.738 per common share, payable in June 2019.

Frequently Asked Questions

The substantial increase in earnings was driven by several factors, including the absence of losses recognized in the prior year related to asset sales (MOLP and Line 10), a significant positive swing in unrealized derivative fair value gains, and strong operational performance in key segments like Liquids Pipelines and Gas Transmission & Midstream due to higher volumes, tolls, and new assets.

Yes, the U.S. Line 3 Replacement Program in Minnesota is experiencing permitting delays, pushing the expected in-service date to the second half of 2020. This has led to the development of a revised construction schedule and cost estimates, with a risk of exceeding the total project cost estimate of $9 billion.

Enbridge maintains strong liquidity through committed credit facilities and cash from operations. As of March 31, 2019, the company had $7.24 billion in net available liquidity. They also actively manage their debt portfolio and reported compliance with all debt covenants.

Liquids Pipelines saw improved performance due to higher tolls and throughput. Gas Transmission & Midstream benefited from the absence of prior-year charges and contributions from new assets. Gas Distribution performed well due to colder weather and higher rates. Renewable Power Generation and Transmission results were mixed, impacted by wind resources and project completions, while Energy Services showed an increase due to widening differentials.