8-K

ENBRIDGE INC 8-K Report (Jul 29, 2016)

Filed July 29, 2016For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

Enbridge Inc. reported its second quarter 2016 financial results, highlighting increased adjusted earnings before interest and income taxes (EBIT) and available cash flow from operations (ACFFO) compared to the prior year. These improvements were primarily driven by the Liquids Pipelines segment, benefiting from new projects placed into service. However, the second quarter performance was impacted by the extensive wildfires in northeastern Alberta, which temporarily curtailed oil sands production and reduced mainline system deliveries by approximately 10% during May and June, negatively affecting adjusted EBIT and ACFFO per share by an estimated $0.08. Despite this disruption, Enbridge anticipates its full-year 2016 adjusted EBIT and ACFFO per share will remain within previously issued guidance. The company also advanced its secured growth capital program, completing the Eastern Access Program with the Line 6B expansion. Additionally, Enbridge made strategic acquisitions in natural gas processing and offshore wind development. The company emphasized its strong financial position and continued execution of its growth strategy. It raised significant equity in the first and second quarters to bolster financing flexibility and fund its capital program. Enbridge also addressed legal matters, agreeing to a Consent Decree with U.S. environmental agencies regarding past pipeline incidents. Looking forward, Enbridge remains committed to safety, environmental stewardship, and delivering value to shareholders, with a focus on its diversified energy infrastructure assets.

Key Highlights

  • 1Second quarter 2016 adjusted EBIT was $1,089 million and ACFFO was $868 million, both representing increases compared to Q2 2015.
  • 2The wildfires in northeastern Alberta negatively impacted Q2 Liquids Pipelines EBIT by approximately $74 million and ACFFO per share by $0.08, with a recovery expected in Q3.
  • 3Enbridge expects full-year 2016 adjusted EBIT and ACFFO per share to remain within previously communicated guidance ranges, despite wildfire impacts.
  • 4The company completed the Eastern Access Program with the in-service expansion of Line 6B.
  • 5Strategic acquisitions were made, including natural gas processing plants in British Columbia and a stake in a French offshore wind development company.
  • 6Enbridge raised approximately $3.3 billion in total equity year-to-date to fund its growth program and enhance financial flexibility.
  • 7A Consent Decree was agreed upon with U.S. environmental agencies concerning civil penalties and actions related to past pipeline incidents.

Frequently Asked Questions

The wildfires caused a temporary curtailment of oil sands production and necessitated the shutdown of some upstream pipelines and terminal facilities. This resulted in reduced deliveries on Enbridge's liquids mainline system by approximately 255,000 barrels per day during May and June, leading to an estimated negative impact of $74 million on adjusted EBIT and $0.08 per share on ACFFO for the second quarter.

No, Enbridge anticipates that oil sands production has substantially returned to normal levels by the end of June and that system utilization will recover in the third quarter. Despite the Q2 wildfire impact, the company expects its full-year 2016 adjusted EBIT and ACFFO per share to remain within the previously communicated guidance ranges.

Enbridge continued the execution of its $26 billion secured growth capital program, completing the Line 6B expansion as part of the Eastern Access Program. The company also made strategic acquisitions, including natural gas processing plants in northeastern British Columbia and an interest in a French offshore wind development company, further diversifying its energy portfolio.

Enbridge raised significant equity in the first and second quarters of 2016, totaling approximately $3.3 billion. This funding is intended to support the equity component of its secured growth capital program through 2017 and provide substantial financial flexibility for responding to new investment opportunities.