10-QPeriod: Q3 FY2022

ENBRIDGE INC Quarterly Report for Q3 Ended Sep 30, 2022

Filed November 4, 2022For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

Enbridge Inc. (ENB) reported strong third-quarter 2022 results driven by significant growth in its Gas Transmission and Midstream segment, largely due to a favorable joint venture merger transaction with Phillips 66 involving DCP Midstream and Gray Oak Pipeline. This transaction, along with contributions from new projects and increased throughput in the Liquids Pipelines segment (supported by incremental Line 3 Replacement capacity), led to a substantial increase in earnings attributable to common shareholders. The company also demonstrated a strategic expansion into renewable energy with the acquisition of Tri Global Energy LLC, an onshore renewable project developer, enhancing its renewable power platform. Despite higher interest expenses and depreciation, Enbridge maintained solid operational performance and a strong liquidity position with increased available credit facilities, positioning it to fund its ongoing capital projects.

Key Highlights

  • 1Earnings attributable to common shareholders increased significantly year-over-year, primarily driven by a $1.1 billion gain from the DCP Midstream and Gray Oak Pipeline joint venture merger transaction.
  • 2The Gas Transmission and Midstream segment saw substantial EBITDA growth, benefiting from higher commodity prices and contributions from new projects.
  • 3Acquisition of Tri Global Energy LLC strengthens Enbridge's renewable power generation portfolio and accelerates its North American growth strategy.
  • 4Liquids Pipelines segment EBITDA improved due to higher throughput, driven by increased demand and incremental Line 3 Replacement capacity, along with contributions from new export assets.
  • 5Enbridge completed a transaction with Athabasca Indigenous Investments, selling an 11.6% non-operating interest in seven Regional Oil Sands pipelines for $1.1 billion.
  • 6The company maintained a strong liquidity position, with net available liquidity totaling $8.1 billion, supported by available credit facilities and unrestricted cash.
  • 7Debt management remains a focus, with ongoing long-term debt issuances and repayments, and a commitment to maintaining investment-grade credit ratings.

Frequently Asked Questions

The primary driver of Enbridge's earnings growth in the third quarter of 2022 was a significant gain of $1.1 billion (US$832 million) resulting from the joint venture merger transaction with Phillips 66, which realigned Enbridge's economic interests in DCP Midstream, LLC and Gray Oak Pipeline, LLC. This transaction boosted the Gas Transmission and Midstream segment's performance.

Enbridge has expanded its renewable energy presence through the acquisition of Tri Global Energy LLC (TGE) on September 27, 2022. TGE is a U.S.-based renewable project developer with a portfolio of wind and solar projects, which enhances Enbridge's renewable power platform and supports its North American growth strategy.

Enbridge is involved in several legal proceedings concerning its Line 5 pipeline. In Wisconsin, a court found Enbridge in trespass on certain tracts of the Bad River Reservation and determined the Band is entitled to profits-based damages and an injunction, with the specifics to be determined at trial. In Michigan, a motion to remand a case challenging the Line 5 easement in the Straits of Mackinac was denied, keeping the case in U.S. District Court.

Enbridge maintains strong liquidity through a combination of operating cash flow, commercial paper, committed credit facilities, and long-term debt. As of September 30, 2022, net available liquidity was $8.1 billion. The company actively manages its debt profile through issuances and repayments and aims to maintain investment-grade credit ratings. They are in compliance with all debt covenants.