8-K

ENBRIDGE INC 8-K Report (Aug 3, 2017)

Filed August 3, 2017For Securities:ENBENBMFEBBGFEBRGFEBRZFENBGFENBRFENFFFEBGEFENBFFENBHFENBNFENBOFENBSFEBBNFENNPF

Summary

Enbridge Inc. (ENB) reported its second quarter 2017 financial results, marking the first full quarter following the significant merger with Spectra Energy. The company reported strong adjusted earnings and available cash flow from operations (ACFFO), largely driven by the newly acquired natural gas assets which have diversified Enbridge's business profile. Despite some temporary headwinds in the Liquids Pipelines segment, including customer facility outages and maintenance programs, management anticipates improved performance in the second half of the year due to returning volumes and optimization projects. The company continues to execute its growth program, bringing substantial projects online and adding new, secured growth projects to its pipeline. These projects are underpinned by long-term contracts, reinforcing Enbridge's commitment to a growing dividend. Furthermore, Enbridge has actively managed its balance sheet through debt issuance and asset monetizations, positioning itself for continued financial strength and operational reliability.

Key Highlights

  • 1Reported Q2 2017 adjusted earnings of $662 million ($0.41 per common share) and ACFFO of $1,324 million ($0.81 per common share).
  • 2The merger with Spectra Energy closed on February 27, 2017, with the newly acquired natural gas assets significantly contributing to earnings growth and diversification.
  • 3The Liquids Pipelines segment experienced temporary disruptions impacting results, but expects improved performance in H2 2017 with returning volumes and completed capacity optimization projects.
  • 4Enbridge began construction on segments of the Line 3 Replacement Program in Canada and Wisconsin, with an expected in-service date in the second half of 2019. The estimated project cost is now $5.3 billion (Canada) and US$2.9 billion (US).
  • 5Continued execution of the secured growth program, bringing over $6 billion of projects into service year-to-date, with an additional $7 billion expected in the remainder of 2017.
  • 6Announced $1.9 billion in new secured growth projects, including the T-South natural gas pipeline expansion and the Spruce Ridge program.
  • 7Strengthened the balance sheet by issuing US$1.0 billion of hybrid debt and completing asset monetizations totaling $2.5 billion since the merger announcement, including the sale of the Olympic Pipeline.
  • 8Declared a quarterly common share dividend of $0.61 per share, representing a 15% increase year-over-year.

Frequently Asked Questions

Enbridge reported adjusted earnings of $662 million ($0.41 per common share) and Available Cash Flow from Operations (ACFFO) of $1,324 million ($0.81 per common share) for the second quarter of 2017. This performance was boosted by the inclusion of newly acquired natural gas assets from the Spectra Energy merger.

The primary driver for the growth in Adjusted EBIT was the contribution from the natural gas assets acquired through the Spectra Energy merger, which significantly diversified the company's asset base. Improved performance in Green Power and Transmission and a stronger U.S. dollar also contributed positively.

Construction has commenced on segments of the Line 3 Replacement Program in Canada and Wisconsin. The project, which fully replaces existing pipeline segments, is anticipated to be in service in the second half of 2019. The estimated cost has been revised to $5.3 billion in Canada and US$2.9 billion in the United States, primarily due to regulatory delays and scope changes.

Enbridge is funding its growth through a combination of internally generated cash flow, debt issuance, and asset monetizations. In Q2 2017, the company raised over $5 billion in term debt and issued US$1.0 billion in hybrid securities. Asset monetizations, including the sale of the Olympic Pipeline, have reached $2.5 billion since the merger announcement, providing capital for re-deployment into growth projects.