8-K

ENBRIDGE INC 8-K Report (Sep 1, 2016)

Filed September 1, 2016For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

Enbridge Inc. (ENB) and its affiliate Enbridge Energy Partners, L.P. (EEP) announced on August 2, 2016, a significant agreement to acquire a 49% equity interest in the holding company for the Bakken Pipeline System. This strategic acquisition, which includes the Dakota Access Pipeline (DAPL) and the Energy Transfer Crude Oil Pipeline (ETCO), represents a substantial investment of $1.5 billion for EEP's effective 27.6% stake. The Bakken Pipeline System is designed to transport crude oil from the Bakken formation in North Dakota to key markets on the U.S. Gulf Coast and Eastern U.S., providing critical market access and enhancing Enbridge's liquids pipeline strategy. The transaction is expected to be immediately accretive to distributable cash flow upon the pipelines coming into service, anticipated by the end of 2016. The pipelines are highly contracted, supported by long-term take-or-pay agreements with creditworthy counterparties, offering strong risk-adjusted returns. This move also allows Enbridge to potentially extend the reach of its existing liquids pipeline network, leveraging its Southern Access Extension to connect to ETCO. As a result of this strategic shift, Enbridge Energy Partners, L.P. and Marathon Petroleum Corporation plan to terminate their joint venture agreements for the Sandpiper Pipeline Project.

Key Highlights

  • 1Enbridge and Enbridge Energy Partners (EEP) to acquire a 49% equity interest in the Bakken Pipeline System for $1.5 billion (EEP's portion).
  • 2The Bakken Pipeline System includes the Dakota Access Pipeline (DAPL) and the Energy Transfer Crude Oil Pipeline (ETCO), connecting North Dakota's Bakken formation to U.S. Gulf Coast and Eastern markets.
  • 3The investment is expected to be immediately accretive to distributable cash flow upon project completion, targeted for the end of 2016.
  • 4Both DAPL and ETCO are highly contracted with long-term take-or-pay agreements from creditworthy counterparties.
  • 5The acquisition is expected to bolster Enbridge's liquids pipeline strategy and enhance market access for its customers.
  • 6Enbridge Energy Partners, L.P. will terminate its Sandpiper Pipeline Project joint venture agreements with Marathon Petroleum Corporation.
  • 7Enbridge intends to fund EEP's investment through bridge financing and longer-term joint funding arrangements.

Frequently Asked Questions

The main purpose of this acquisition is to secure critical market access for crude oil produced from the Bakken formation in North Dakota, transporting it to major demand centers on the U.S. Gulf Coast and in Eastern U.S. This strategic move is designed to enhance Enbridge's liquids pipeline network, provide improved netbacks for customers, and generate accretive cash flow.

Both the Dakota Access Pipeline (DAPL) and the Energy Transfer Crude Oil Pipeline (ETCO) projects are expected to be ready for service by the end of 2016. The acquisition is anticipated to be immediately accretive to distributable cash flow once these pipelines commence operations.

Enbridge Energy Partners, L.P. is investing $1.5 billion for its effective 27.6% interest in the Bakken Pipeline System. The company plans to fund this through bridge financing from Enbridge Inc. and potentially a longer-term joint funding arrangement. The investment is expected to be immediately accretive to EEP's distributable cash flow.

As a consequence of this strategic acquisition of an interest in the Bakken Pipeline System, Enbridge Energy Partners, L.P. and Marathon Petroleum Corporation plan to terminate their joint venture agreements for the Sandpiper Pipeline Project. EEP will retain 100% ownership of its legacy North Dakota system.