10-QPeriod: Q3 FY2019

ENBRIDGE INC Quarterly Report for Q3 Ended Sep 30, 2019

Filed November 8, 2019For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

Enbridge Inc. reported solid financial results for the nine months ended September 30, 2019, with earnings attributable to common shareholders increasing significantly to $4.58 billion from $1.43 billion in the prior year period. This increase was driven by several factors, including the absence of substantial goodwill impairment charges and other non-recurring items that impacted the prior year. Operationally, the Liquids Pipelines segment showed strength with higher throughput and improved toll rates. The Gas Transmission and Midstream segment also contributed positively, benefiting from new assets placed into service and favorable foreign exchange rates. Despite overall positive trends, the company is navigating regulatory challenges, particularly with the U.S. Line 3 Replacement Program in Minnesota, which has experienced permitting delays. The company also reported a rupture on its Texas Eastern natural gas pipeline system, which resulted in increased operating costs and lower revenues for the quarter. Enbridge continues to manage its liquidity and capital resources effectively, with a strong focus on maintaining its investment-grade credit rating and supporting its dividend payments.

Key Highlights

  • 1Earnings attributable to common shareholders significantly increased to $4.58 billion for the nine months ended September 30, 2019, compared to $1.43 billion for the same period in 2018, largely due to the absence of prior year impairment charges.
  • 2The Liquids Pipelines segment demonstrated strong operational performance, with higher throughput and improved toll rates contributing to increased earnings.
  • 3The company is progressing with its secured growth projects, with a $19 billion inventory of projects scheduled for service between 2019 and 2023.
  • 4The U.S. Line 3 Replacement Program in Minnesota is facing regulatory and permitting delays, impacting its expected in-service date and potentially increasing costs.
  • 5A rupture occurred on the Texas Eastern natural gas pipeline system in August 2019, leading to temporary operational disruptions, lower revenues, and increased costs, partially offset by insurance programs.
  • 6Enbridge maintains strong liquidity, with $7.22 billion in net available liquidity as of September 30, 2019, and remains in compliance with all debt covenants.
  • 7The company completed several divestitures, including Enbridge Gas New Brunswick and St. Lawrence Gas, as part of its portfolio optimization strategy.

Frequently Asked Questions

The substantial increase in earnings attributable to common shareholders is primarily due to the absence of significant non-recurring items in 2019, such as goodwill impairment charges and losses on asset sales, which negatively impacted earnings in the prior year. Operationally, improved performance in the Liquids Pipelines segment also contributed positively.

The primary challenge is the regulatory and permitting process for the U.S. Line 3 Replacement Program in Minnesota, which has experienced delays. Additionally, a rupture on the Texas Eastern natural gas pipeline system in August 2019 has resulted in operational disruptions and increased costs, although insurance coverage is in place.

Enbridge maintains a strong focus on financial discipline, evidenced by its compliance with debt covenants and a robust liquidity position of $7.22 billion as of September 30, 2019. The company utilizes a diversified funding strategy, including cash from operations, commercial paper, credit facilities, and capital market access to meet its financial obligations and fund its growth projects.

Enbridge has a robust pipeline of commercially secured growth projects valued at $19 billion, with expected in-service dates ranging from 2019 to 2023. While most projects are progressing, the U.S. Line 3 Replacement Program is subject to regulatory timelines. The company is also advancing other projects under development, such as the Gray Oak Pipeline and various renewable energy projects.