10-QPeriod: Q3 FY2021

ENBRIDGE INC Quarterly Report for Q3 Ended Sep 30, 2021

Filed November 5, 2021For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

Enbridge Inc. reported strong financial results for the nine months ended September 30, 2021, with earnings attributable to common shareholders significantly increasing year-over-year. This growth was driven by robust performance across its Liquids Pipelines and Gas Transmission and Midstream segments, boosted by recovering demand and strategic project contributions. The company also made significant progress on its strategic initiatives, including the acquisition of Moda Midstream Operating, LLC, which enhances its US Gulf Coast export strategy, and advancements in renewable energy through a partnership with Vanguard Renewables. Financially, Enbridge demonstrated solid liquidity and managed its debt effectively, completing its 2021 financing plan and benefiting from an upgrade in credit ratings by Moody's. Despite some non-cash charges, such as derivative fair value adjustments and impairments on specific investments like PennEast, the underlying operational performance and strategic acquisitions highlight a positive trajectory for the company. The completion of the Line 3 Replacement Program is a key operational achievement, ensuring reliable energy supply and restoring historical capacity. Investors should note the company's continued focus on growth projects, including renewable energy initiatives and expansions in its core midstream and gas distribution businesses. While challenges remain, such as ongoing legal proceedings related to Line 5 and Dakota Access Pipeline, Enbridge's diversified business model, strong liquidity, and strategic M&A activity position it to navigate these challenges and pursue further growth opportunities.

Key Highlights

  • 1Earnings attributable to common shareholders saw a significant increase of $2.4 billion for the first nine months of 2021 compared to the same period in 2020, driven by operational improvements and favorable non-operating items.
  • 2The company completed the acquisition of Moda Midstream Operating, LLC for US$3.0 billion, strengthening its US Gulf Coast export strategy and connecting it to key supply basins.
  • 3Construction of the US portion of the Line 3 Replacement Program was completed and placed into service on October 1, 2021, restoring Line 3 to its historic capacity of 760 kbpd.
  • 4Enbridge announced a partnership with Vanguard Renewables to invest in renewable natural gas (RNG) infrastructure, converting waste into pipeline-quality gas, with Enbridge contributing approximately $100 million.
  • 5Moody's Investors Service upgraded Enbridge Inc.'s credit ratings to Baa1 from Baa2 with a stable outlook on June 1, 2021, reflecting the company's financial strength.
  • 6Total committed credit facilities remain substantial at $21.1 billion, with $9.6 billion available as of September 30, 2021, ensuring robust liquidity.
  • 7The company reported $111 million impairment on its investment in the PennEast pipeline project due to the cessation of further development.

Frequently Asked Questions

For the nine months ended September 30, 2021, Enbridge reported a significant increase in earnings attributable to common shareholders, reaching $3.976 billion, compared to $1.208 billion in the same period of 2020. This improvement was driven by strong operational performance in its Liquids Pipelines and Gas Transmission and Midstream segments, as well as the absence of certain significant impairment charges recorded in the prior year. Net cash provided by operating activities was $6.954 billion.

Enbridge made significant strategic moves, including the acquisition of Moda Midstream Operating, LLC, a US Gulf Coast crude export platform, for US$3 billion, which enhances its export strategy. Additionally, it announced a partnership with Vanguard Renewables to develop renewable natural gas (RNG) projects. The company also saw the completion of the US Line 3 Replacement Program, a major infrastructure project.

Enbridge maintains a strong liquidity position with $9.57 billion in available committed credit facilities as of September 30, 2021, totaling $21.1 billion. The company completed its 2021 financing plan, which included various debt issuances and renewals of credit facilities, ensuring it has ample funds to meet operational needs and capital expenditures. Moody's upgraded Enbridge's credit rating to Baa1 in June 2021, reflecting its solid financial standing.

Enbridge recorded an impairment loss of $111 million on its investment in the PennEast pipeline project due to its cessation of development. The company also continues to be involved in legal and regulatory proceedings, most notably concerning the Line 5 pipeline in Michigan and the Dakota Access Pipeline. While management believes these will not materially impact the company's financial position, they represent ongoing risks to monitor.