8-K

ENBRIDGE INC 8-K Report (Aug 2, 2012)

Filed August 2, 2012For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

Enbridge Inc. (ENB) filed a Form 6-K on August 2, 2012, reporting its financial and operational results for the second quarter and first half of 2012. The report highlights a 7% increase in adjusted earnings to $277 million for Q2 2012, totaling $653 million for the first half. Key strategic developments include significant investments in pipeline expansion projects totaling $3.2 billion, aimed at enhancing market access for Western Canadian and Bakken crude oil. The Seaway Pipeline reversal was completed, offering initial crude oil transportation capacity to the U.S. Gulf Coast, with further expansions planned. Despite strong operational execution and growth initiatives, the company also addressed operational incidents. Enbridge responded to reports from the National Transportation Safety Board regarding a 2010 Michigan crude oil release and confirmed a new crude oil release in Wisconsin on July 27, 2012, for which cleanup and restoration efforts are ongoing. Financially, Enbridge continued its financing plan with substantial issuance of preference and common shares, as well as a unique 100-year bond, to support its growth projects. The company reiterated its full-year adjusted earnings per share guidance.

Key Highlights

  • 1Second quarter adjusted earnings increased 7% to $277 million ($0.36 per share), with six-month adjusted earnings up 11% to $653 million ($0.86 per share).
  • 2Announced $3.2 billion in new Eastern Access and Mainline Expansion projects to improve market access for Western Canadian and Bakken crude oil.
  • 3Completed the Seaway Pipeline reversal, enabling crude oil transportation from Cushing, Oklahoma, to the U.S. Gulf Coast, with further capacity enhancements expected.
  • 4Executed significant financing activities, including $1.06 billion in preference shares and $0.4 billion in common shares, alongside a $0.1 billion 100-year bond, to fund growth.
  • 5Celebrated grand openings for the Silver State North Solar Project and Greenwich Windfarm, advancing renewable energy initiatives.
  • 6Addressed NTSB findings on the 2010 Michigan oil release and reported a new crude oil release on Line 14 in Wisconsin, with ongoing cleanup and regulatory engagement.
  • 7Confirmed full-year adjusted earnings per share guidance range of $1.58 to $1.74.

Frequently Asked Questions

For the second quarter of 2012, Enbridge reported earnings attributable to common shareholders of $11 million, or $0.01 per common share. However, adjusted earnings, which exclude certain non-cash and non-recurring items, were $277 million, or $0.36 per common share, representing a 7% increase compared to the same period in 2011. For the six months ended June 30, 2012, adjusted earnings were $653 million, or $0.86 per common share, an 11% increase year-over-year.

Enbridge announced significant expansions and new projects totaling $3.2 billion. These include additional Eastern Access projects such as an 80,000 bpd expansion of the Toledo Pipeline and a re-reversal of Line 9B from Ontario to Montreal. Complementary expansions are also planned for the U.S. mainline system between Illinois and Ontario, including Line 67 (Alberta Clipper) and Line 61 (Southern Access). These projects are part of an estimated $8 billion investment strategy to support a 10% growth rate in adjusted earnings per share.

On July 27, 2012, Enbridge confirmed a crude oil release on Line 14 near Grand Marsh, Wisconsin. The pipeline was immediately shut down and isolated. Cleanup and restoration efforts are underway, and repairs to Line 14 are complete. Enbridge is working with the Pipeline and Hazardous Materials Safety Administration (PHMSA) to meet requirements for the line's restart, and is mitigating the impact on shippers. EEP estimates costs for repair and remediation to be approximately US$8 million.

To support its growth initiatives, Enbridge actively raised capital. In the second quarter, it issued approximately $610 million in preference shares (with an additional $450 million in July) and $400 million in common shares. Additionally, its subsidiary Enbridge Pipelines Inc. issued a $100 million 100-year bond. These activities, along with existing credit facilities, bolstered liquidity and supported the company's extensive project pipeline.