8-K

ENBRIDGE INC 8-K Report (Jul 31, 2015)

Filed July 31, 2015For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

Enbridge Inc. reported solid financial results for the second quarter and first half of 2015, with adjusted earnings of $505 million ($0.60 per common share) and available cash flow from operations (ACFFO) of $808 million ($0.96 per common share) for the quarter. This represents significant year-over-year growth in ACFFO. The company is on track with its growth capital program, having completed $3 billion in projects since the end of 2014 and expecting to complete another $5 billion by year-end 2015. A key strategic development is the agreement to transfer its Canadian liquids pipelines business and Canadian renewable energy assets to Enbridge Income Fund for $30.4 billion, a transaction expected to close in the third quarter of 2015. This transaction is part of a broader financial strategy optimization aimed at enhancing shareholder value, supporting a previously announced dividend increase, and providing alternative funding for growth initiatives. Enbridge also provided updated guidance for 2015 ACFFO between $3.30 and $4.00 per common share. While the U.S. master limited partnership market conditions currently hinder a large-scale dropdown of U.S. liquids pipelines to Enbridge Energy Partners, L.P. (EEP), the company remains committed to supporting EEP's significant organic growth. Notable operational updates include progress on the Sandpiper Pipeline Project with a Certificate of Need granted in Minnesota and advancements on the reversal of Line 9B and expansion of Line 9, with hydrostatic testing expected to be completed by year-end 2015. The company also reported a non-cash goodwill impairment charge of $440 million related to EEP's natural gas and NGL businesses.

Key Highlights

  • 1Second quarter adjusted earnings of $505 million ($0.60 per common share) and available cash flow from operations (ACFFO) of $808 million ($0.96 per common share).
  • 2Agreement to transfer Canadian liquids pipelines and renewable energy assets to Enbridge Income Fund for $30.4 billion, expected to close in Q3 2015.
  • 32015 ACFFO guidance issued at $3.30 to $4.00 per common share.
  • 4Approximately $3 billion of growth projects completed since year-end 2014, with $5 billion more expected by year-end 2015.
  • 5Announced a $44 billion growth capital program over the five-year planning horizon (2014-2018), with $34 billion commercially secured.
  • 6A non-cash goodwill impairment charge of $440 million ($167 million after-tax) was recorded related to Enbridge Energy Partners, L.P.'s natural gas and NGL businesses.
  • 7Declared a quarterly common share dividend of $0.46500.

Frequently Asked Questions

Enbridge announced an agreement to transfer its Canadian liquids pipelines business and Canadian renewable energy assets to Enbridge Income Fund for $30.4 billion. This strategic move is designed to optimize Enbridge's financial structure, enhance its ability to capture new investment opportunities, provide alternative funding sources for growth initiatives, and potentially accelerate dividend growth. The transaction is expected to close in the third quarter of 2015, subject to regulatory and shareholder approvals.

Enbridge reported strong results, with adjusted earnings of $505 million, or $0.60 per common share, for the second quarter of 2015. More significantly, available cash flow from operations (ACFFO) increased to $808 million, or $0.96 per common share, a substantial increase from $516 million ($0.63 per common share) in the same quarter last year. The company also provided 2015 ACFFO guidance of $3.30 to $4.00 per common share.

Enbridge is actively executing its growth capital program. The company has completed approximately $3 billion of projects since the end of 2014 and is on track to complete another $5 billion by the end of 2015. Key projects include expansions on the Alberta Clipper line and progress on the Line 9B reversal and expansion, with several other projects across its liquids and gas pipeline businesses progressing or under construction.

Yes, Enbridge recorded a non-cash goodwill impairment charge of $440 million ($167 million after-tax) related to its Enbridge Energy Partners, L.P. (EEP) natural gas and NGL businesses. This impairment was due to prolonged declines in commodity prices affecting projected volumes. Additionally, the company noted that changes in unrealized derivative fair value gains and losses can create volatility in short-term earnings, though they are believed to support long-term cash flows.