8-K

ENBRIDGE INC 8-K Report (Jun 1, 2012)

Filed June 1, 2012For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

This Form 6-K filing by Enbridge Inc. (ENB) on June 1, 2012, serves as a report of foreign issuer and incorporates several press releases issued throughout May 2012. The key information for investors revolves around significant capital investments in energy infrastructure, a substantial write-down related to a subsidiary, and equity and preferred share offerings to fund growth. Enbridge announced a $2.6 billion investment in Eastern Access projects, including pipeline expansions and reversals, and a $0.2 billion expansion of the Canadian mainline, alongside a $0.4 billion expansion between North Dakota and the Chicago hub. Additionally, the company highlighted the completion of the Seaway pipeline reversal, a joint venture with Enterprise Products Partners, which provides access to Gulf Coast refineries. Financially, Enbridge confirmed a $262 million write-down for Enbridge Gas New Brunswick (EGNB) due to regulatory changes in New Brunswick. To support its growth initiatives and general corporate purposes, Enbridge successfully closed a US$400 million preferred share offering and announced a $400 million common equity offering. The company reiterated its positive outlook, confident in achieving 10+% annual earnings per share growth through the middle of the decade, supported by a robust pipeline of future projects.

Key Highlights

  • 1Enbridge is proceeding with $2.6 billion in Eastern Access projects, including expansions and reversals of key pipelines (e.g., Toledo Pipeline, Line 9B) to improve market access for Western Canadian and Bakken crude oil.
  • 2Significant expansions are planned for the U.S. mainline system (Spearhead North, Line 6B, Line 5) with an estimated cost of $2.2 billion to increase capacity to refineries.
  • 3The company announced a $0.2 billion expansion of the Canadian mainline (Line 67) and a $0.4 billion expansion of the Lakehead System (Alberta Clipper and Southern Access) to support increased throughput.
  • 4The Seaway pipeline reversal, a 50/50 joint venture with Enterprise Products Partners, has been completed, providing initial capacity of 150,000 bpd from Cushing, OK to the U.S. Gulf Coast, with plans to increase to over 400,000 bpd.
  • 5Enbridge recorded a $262 million after-tax write-down for its investment in Enbridge Gas New Brunswick (EGNB) due to changes in New Brunswick's rate regulation.
  • 6The company successfully closed a US$400 million offering of Series L Cumulative Redeemable Preference Shares and announced a C$400 million common equity offering to fund capital projects and reduce debt.
  • 7Enbridge CEO expressed confidence in achieving 10+% annual earnings per share growth through the middle of the decade, supported by a large pipeline of future growth projects valued at over $30 billion.

Frequently Asked Questions

Enbridge recorded a net charge of $262 million (after tax) due to a write-down of its investment in EGNB. This was necessitated by a change in the rate setting methodology enacted by the Government of New Brunswick, which means EGNB no longer meets the criteria for continuation of rate regulated accounting.

In May 2012, Enbridge announced significant investments including $2.6 billion for Eastern Access projects (pipeline expansions and reversals), $2.2 billion for U.S. mainline expansions, and $0.2 billion for a Canadian mainline expansion. Additionally, the Seaway pipeline reversal project, a joint venture with Enterprise Products Partners, was completed to transport crude oil from Cushing, Oklahoma to the U.S. Gulf Coast.

Enbridge is financing its growth through a combination of debt and equity. This period saw the closing of a US$400 million preferred share offering and the announcement of a C$400 million common equity offering. These proceeds are intended to fund capital projects, reduce indebtedness, and for general corporate purposes.

Enbridge's CEO expressed confidence in achieving 10+% annual earnings per share growth through the middle of the decade. This outlook is supported by a large pipeline of growth prospects across all its operations, with $14 billion of new projects expected to come online by 2015 and over $30 billion in identified opportunities for later in the decade.