CALGARY, ALBERTA--(Marketwire - May 9, 2012) -
(all financial figures are unaudited and in Canadian dollars)
- First quarter earnings were $264 million including unrealized non-cash mark-to-market losses
- First quarter adjusted earnings increased 14% to $376 million
- U.S. Gulf Coast access initiative upsized to a $5.2 billion investment
- Acquisition of a 100% interest in the 50-megawatt Silver State North Solar Project development in Nevada
- Issuance of $1.05 billion in preference shares
- Enbridge named one of the Global 100 Most Sustainable Corporations, one of Canada's Greenest Employers and a member of the FTSE4Good Index
Enbridge Inc. (TSX:ENB) (NYSE:ENB) - "With first quarter adjusted earnings of $376 million, or $0.50 per share, Enbridge begins 2012 firmly on track to achieve our full year adjusted earnings guidance of $1.58 to $1.74 per share," said Patrick D. Daniel, Chief Executive Officer.
First quarter 2012 earnings of $264 million included unrealized non-cash mark-to-market losses, primarily related to the revaluation of financial derivatives used to risk manage the profitability of forward transportation and storage transactions. These short-term non-cash fluctuations in reported earnings are a result of Enbridge's hedging program, which over the long-term will support the Company's reliable cash flows and capacity for ongoing dividend growth.
In the first quarter, Enbridge announced it had received sufficient commitments from shippers to upsize its proposed Flanagan South Pipeline Project and, with joint venture partner, Enterprise Products Partners, L.P. (Enterprise) to twin the Seaway Crude Pipeline System, bringing Enbridge's expected investment in its U.S. Gulf Coast initiative to $5.2 billion.
"The commitments secured in the open seasons held in the fourth quarter of last year and the first quarter of 2012 will support additional infrastructure to meet the growing transportation needs of Bakken and western Canadian producers and U.S. Gulf Coast refiners, contributing to North America's energy security," said Mr. Daniel. "The new upsized Flanagan South Pipeline, combined with our existing Spearhead Pipeline system, will offer shippers 775,000 barrels per day of capacity from Flanagan to Cushing, with the Seaway Crude Pipeline System reversal and expansion offering capacity of 850,000 barrels per day from Cushing to the Gulf Coast.
"By leveraging existing infrastructure wherever possible, impacts to landowners, communities and the environment will be minimized," added Mr. Daniel.
In green energy, Enbridge added to its growing portfolio of renewable generation assets with the acquisition of a 100% interest in the Silver State North Solar Project (Silver State) development in Nevada.
"Silver State marks Enbridge's entry into the U.S. solar energy market, which offers significant growth opportunities given the excellent solar resource, supportive regulatory environment and expanding portfolio of solar energy projects," said Mr. Daniel. "The project complements Enbridge's growing portfolio of renewable and alternative energy technologies that now includes interests in eight wind farms, four solar projects, a hybrid fuel cell, geothermal and four waste heat recovery facilities. Together, Enbridge has interests in a renewable energy portfolio of almost 1,000 megawatts."
During the quarter, Enbridge continued to be active in capital markets. Noted Mr. Daniel, "Over the past eight months Enbridge has issued $2 billion in preference shares, bolstering our balance sheet as we embark upon the largest slate of growth projects we've ever had before us."
In January, Enbridge was recognized as one of the Corporate Knights Global 100 Most Sustainable Corporations, and in March, FTSE Group reaffirmed Enbridge's membership in the FTSE4Good Index series which identifies companies that meet globally recognized corporate responsibility standards. In April, Enbridge was named one of Canada's Greenest Employers.
"It is gratifying to be recognized for the sustainability of our business model, our commitment to delivering on our social responsibilities, and our continuing efforts to minimize the environmental impact of our activities," said Mr. Daniel. "Enbridge's more than 7,000 employees work tirelessly to achieve our vision of being the leading energy delivery company in North America. I thank all of them for their outstanding work and continuing commitment to our corporate values and to Corporate Social Responsibility."
"Enbridge continues to deliver strong financial performance across our liquids pipelines, gas pipelines and processing, gas distribution and green energy businesses," concluded Mr. Daniel. "We have had exceptional success in securing new projects across all of our business units, we are well positioned to fund our growth and, with a strong start to the year, we expect to continue to deliver superior returns to our investors."
FIRST QUARTER 2012 OVERVIEW
For more information on Enbridge's growth projects and operating results, please see the Management's Discussion and Analysis (MD&A) which is filed on SEDAR and EDGAR and also available on the Company's website at www.enbridge.com/InvestorRelations.aspx.
- The decrease in earnings from $364 million for the first quarter of 2011 to $264 million for the first quarter of 2012 was primarily due to the recognition of net unrealized fair value losses of $110 million (2011 - nil) from the revaluation of financial derivatives related to the Company's risk management activities. Contributing to the overall decrease in earnings were lower earnings from Enbridge Gas Distribution (EGD) due to warmer weather. Partially offsetting these quarter-over-quarter declines were increased earnings from Liquids Pipelines as a result of favourable operating performance under the Competitive Toll Settlement.
- Enbridge's first quarter adjusted earnings increased 14% to $376 million as a result of increased contributions from Canadian Mainline, which benefited from strong volumes, continued positive performance at EGD reflecting favourable operating performance, and an increase in earnings from Enbridge Energy Partners, L.P. due to stronger results from the liquids and natural gas businesses, as well as higher incentive income. Corporate earnings also contributed to increased first quarter adjusted earnings due to the Company's increased investment in Noverco Inc. (Noverco) and lower residual financing costs.
- On May 7, 2012, Enbridge announced Silver State began commercial operation. A 100% interest in the 50-megawatt Silver State development in Clark County, Nevada was acquired in March 2012 at an estimated cost of $0.2 billion. Located 65 kilometers (40 miles) south of Las Vegas, Nevada, Silver State was constructed under a fixed-price engineering, procurement and construction agreement with First Solar. First Solar will provide operations and maintenance services under a long-term contract. NV Energy will purchase the energy output under a 25-year power purchase agreement.
- On April 19, 2012, Enbridge announced the closing of the issue of eight million cumulative redeemable preference shares, series J at a price of US$25 per share for aggregate gross proceeds of US$200 million.
- On April 16, 2012, the Government of New Brunswick enacted a final rates and tariffs regulation which set limits on gas distribution rates within the province. Enbridge had advised on March 12, 2012, when the regulation was still in draft form, that it faced a potential write down of a significant portion of the value of its investment in Enbridge Gas New Brunswick (EGNB), the New Brunswick gas distribution utility. With the finalization of the regulation, Enbridge has confirmed a write down of $262 million. The impact of this charge was recognized as a subsequent event in the Company's 2011 United States generally accepted accounting principles (U.S. GAAP) consolidated financial statements, voluntarily filed on May 2, 2012.
On April 26, 2012, the Company, Enbridge Energy Distribution Inc. (EEDI) and EGNB, commenced an action against the Province of New Brunswick in the New Brunswick Court of Queen's Bench, claiming damages in the amount of $650 million as a result of the continuing breaches by the Province of the General Franchise Agreement it signed with Enbridge in 1999. Additionally, on May 2, 2012, the Company, EEDI and EGNB filed a Notice of Application with the New Brunswick Court of Queen's Bench seeking a declaration from the Court that the rates and tariffs regulation is invalid. There is no assurance these actions will be successful or will result in any recovery.
- On March 29, 2012, Enbridge closed its offering of cumulative redeemable preference shares, series H. Due to strong investor demand, the size of the offering was increased to 14 million shares, for aggregate gross proceeds of $350 million.
- Enbridge announced on March 26, 2012, its intent to upsize the capacity of its U.S. Gulf Coast Access projects. The Flanagan South Pipeline from Flanagan, Illinois to Cushing, Oklahoma will be upsized to a 36-inch diameter line with an initial annual capacity of 585,000 barrels per day (bpd). Enbridge, with joint venture partner Enterprise will construct an 805-kilometre (500-mile), 30-inch diameter twin (a parallel line) along the route of their jointly owned Seaway Pipeline, adding 450,000 bpd of capacity to the existing system. The partners will also proceed with construction of an extension from Houston to Port Arthur/Beaumont, adding 560,000 bpd of capacity to that system. The total estimated cost of the Flanagan South Pipeline project, as a result of the larger capacity and pipeline size, has increased from the original US$1.9 billion to US$2.8 billion. In addition, the Enbridge share of the cost of the Seaway Pipeline twin line and extension is expected to be approximately US$1.0 billion.
The increased Flanagan South Pipeline and Seaway Pipeline capacity is required to accommodate additional commitments for Gulf Coast service, originating from both Flanagan and Cushing, received through recently completed second open seasons. Both the Flanagan South Pipeline and Seaway twin pipeline are expected to be in service by mid-2014.
Enterprise and Enbridge are nearing completion of the first phase of the reversal of the Seaway Pipeline, which will provide 150,000 bpd of southbound takeaway capacity from Cushing to the Gulf Coast, anticipated to be in service in May 2012. Following pump station additions and modifications, which are expected to be completed by the first quarter 2013, capacity would increase to 400,000 bpd depending upon the mix of light and heavy grades of crude oil.
- On March 22, 2012, Noverco sold 22.5 million Enbridge common shares through a secondary offering. Enbridge's share of the proceeds of approximately $317 million, expected to be received as a dividend from Noverco in the second quarter of 2012, will be used to pay a portion of the Company's quarterly dividend on June 1, 2012.
- On February 27, 2012, the Board of Directors of Enbridge announced that Patrick D. Daniel, President and Chief Executive Officer (CEO), will retire at or before the end of 2012. The Board also announced the appointment of Al Monaco, previously President, Gas Pipelines, Green Energy and International, to Enbridge's Board of Directors and to the position of President, effective February 27, 2012. Mr. Daniel will continue as CEO and a member of the Board until his retirement.
- On February 23, 2012, Enbridge welcomed the publication of Transport Canada's TERMPOL Review Process Report of the proposed Northern Gateway Project's proposed marine operations. Transport Canada has filed the results of the study with the federal Joint Review Panel (JRP) tasked with assessing the project. The study reviewed the marine operations associated with the Northern Gateway terminal and associated tanker traffic in Canadian waters. The review concluded that: "While there will always be residual risk in any project, after reviewing the proponent's studies and taking into account the proponent's commitments, no regulatory concerns have been identified for the vessels, vessel operations, the proposed routes, navigability, other waterway users and the marine terminal operations associated with vessels supporting the Northern Gateway Project." The TERMPOL report was prepared and approved by Canadian government authorities including Transport Canada; Environment Canada; Fisheries and Oceans Canada; Canadian Coast Guard; and Pacific Pilotage Authority Canada. Further review of the Northern Gateway application by the JRP, as well as other agencies, is ongoing.
- On January 18, 2012, Enbridge closed the offering of cumulative redeemable preference shares, series F. Due to strong investor demand, the size of the offering was increased to 20 million shares, resulting in aggregate gross proceeds of $500 million.
Enbridge will hold a conference call on Wednesday, May 9, 2012 at 9:00 a.m. Eastern Time (7:00 a.m. Mountain Time) to discuss the first quarter 2012 results. Analysts, members of the media and other interested parties can access the call at 617-213-8059 or toll-free at 1-866-825-1692 using the access code of 47854821. The call will be audio webcast live at www.media-server.com/m/p/wd35mvqp. A webcast replay and podcast will be available approximately two hours after the conclusion of the event and a transcript will be posted to the website within 24 hours. The replay at toll-free 1-888-286-8010 or 617-801-6888 (access code 17767809) will be available until May 16, 2012.
The conference call will begin with presentations by the Company's Chief Executive Officer, the President and the Chief Financial Officer, followed by a question and answer period for investment analysts. A question and answer period for members of the media will then immediately follow.
The unaudited interim Consolidated Financial Statements and MD&A, which contain additional notes and disclosures, are available on the Enbridge website at www.enbridge.com/InvestorRelations.aspx.
Enbridge Inc., a Canadian company, is a North American leader in delivering energy and one of the Global 100 Most Sustainable Corporations. As a transporter of energy, Enbridge operates, in Canada and the U.S., the world's longest crude oil and liquids transportation system. The Company also has a significant and growing involvement in the natural gas gathering transmission and midstream businesses, and an increasing involvement in power transmission. As a distributor of energy, Enbridge owns and operates Canada's largest natural gas distribution company, and provides distribution services in Ontario, Quebec, New Brunswick and New York State. Enbridge employs more than 7,000 people, primarily in Canada and the U.S., and is ranked as one of Canada's Greenest Employers and one of the Top 100 Companies to Work for in Canada. Enbridge's common shares trade on the Toronto and New York stock exchanges under the symbol ENB. For more information, visit www.enbridge.com. None of the information contained in, or connected to, Enbridge's website is incorporated in or otherwise part of this news release.
Forward-looking information, or forward-looking statements, have been included in this news release to provide the Company's shareholders and potential investors with information about the Company and its subsidiaries and affiliates, including management's assessment of Enbridge's and its subsidiaries' future plans and operations. This information may not be appropriate for other purposes. Forward-looking statements are typically identified by words such as "anticipate", "expect", "project", "estimate", "forecast", "plan", "intend", "target", "believe" and similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information or statements included or incorporated by reference in this document include, but are not limited to, statements with respect to: expected earnings or adjusted earnings; expected earnings or adjusted earnings per share; expected costs related to projects under construction; expected in-service dates for projects under construction; expected capital expenditures; estimated future dividends; and expected costs related to leak remediation and potential insurance recoveries.
Although Enbridge believes that these forward-looking statements are reasonable based on the information available on the date such statements are made and processes used to prepare the information, such statements are not guarantees of future performance and readers are cautioned against placing undue reliance on forward-looking statements. By their nature, these statements involve a variety of assumptions, known and unknown risks and uncertainties and other factors, which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Material assumptions include assumptions about: the expected supply and demand for crude oil, natural gas and natural gas liquids (NGL); prices of crude oil, natural gas and NGL; expected exchange rates; inflation; interest rates; the availability and price of labour and pipeline construction materials; operational reliability; customer project approvals; maintenance of support and regulatory approvals for the Company's projects; anticipated in-service dates; and weather. Assumptions regarding the expected supply and demand of crude oil, natural gas and NGL, and the prices of these commodities, are material to and underlie all forward-looking statements. These factors are relevant to all forward-looking statements as they may impact current and future levels of demand for the Company's services. Similarly, exchange rates, inflation and interest rates impact the economies and business environments in which the Company operates, may impact levels of demand for the Company's services and cost of inputs, and are therefore inherent in all forward-looking statements. Due to the interdependencies and correlation of these macroeconomic factors, the impact of any one assumption on a forward-looking statement cannot be determined with certainty, particularly with respect to expected earnings or adjusted earnings and associated per share amounts, or estimated future dividends. The most relevant assumptions associated with forward-looking statements on projects under construction, including estimated in-service dates, and expected capital expenditures include: the availability and price of labour and pipeline construction materials; the effects of inflation and foreign exchange rates on labour and material costs; the effects of interest rates on borrowing costs; and the impact of weather and customer and regulatory approvals on construction schedules.
Enbridge's forward-looking statements are subject to risks and uncertainties pertaining to operating performance, regulatory parameters, project approval and support, weather, economic and competitive conditions, exchange rates, interest rates, commodity prices and supply and demand for commodities, including but not limited to those risks and uncertainties discussed in this news release and in the Company's other filings with Canadian and United States securities regulators. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent and Enbridge's future course of action depends on management's assessment of all information available at the relevant time. Except to the extent required by law, Enbridge assumes no obligation to publicly update or revise any forward-looking statements made in this news release or otherwise, whether as a result of new information, future events or otherwise. All subsequent forward-looking statements, whether written or oral, attributable to Enbridge or persons acting on the Company's behalf, are expressly qualified in their entirety by these cautionary statements.
This news release contains references to adjusted earnings/(loss), which represent earnings or loss attributable to common shareholders adjusted for non-recurring or non-operating factors on both a consolidated and segmented basis. These factors are reconciled and discussed in the financial results sections for the affected business segments. Management believes that the presentation of adjusted earnings/(loss) provides useful information to investors and shareholders as it provides increased transparency and predictive value. Management uses adjusted earnings/(loss) to set targets, assess performance of the Company and set the Company's dividend payout target. Adjusted earnings/(loss) and adjusted earnings/(loss) for each of the segments are not measures that have a standardized meaning prescribed by U.S. GAAP and are not considered GAAP measures; therefore, these measures may not be comparable with similar measures presented by other issuers.
|Three months ended|
|(unaudited; millions of Canadian dollars, except per share amounts)|
|Earnings attributable to common shareholders|
|Gas Pipelines, Processing and Energy Services||(111||)||26|
|Earnings per common share1||0.35||0.49|
|Diluted earnings per common share1||0.34||0.48|
|Adjusted earnings 2|
|Gas Pipelines, Processing and Energy Services||36||39|
|Adjusted earnings per common share1||0.50||0.44|
|Cash flow data|
|Cash provided by operating activities||648||1,163|
|Cash used in investing activities||(928||)||(647||)|
|Cash provided by/(used in) financing activities||663||(301||)|
|Common share dividends declared||221||188|
|Dividends paid per common share1||0.2825||0.2450|
|Shares outstanding (millions)|
|Weighted average common shares outstanding1||757||750|
|Diluted weighted average common shares outstanding1||769||758|
|Liquids Pipelines - Average deliveries (thousands of barrels per day)|
|Regional Oil Sands System4||333||329|
|Gas Distribution - Enbridge Gas Distribution|
|Volumes (billions of cubic feet)||161||193|
|Number of active customers (thousands)5||2,001||1,974|
|Heating degree days6|
|Forecast based on normal weather||1,770||1,802|
|Gas Pipelines, Processing and Energy Services - Average throughput volume (millions of cubic feet per day)|
|Alliance Pipeline US||1,632||1,677|
|Enbridge Offshore Pipelines||1,501||1,751|
|(1)||Comparative amounts were restated to reflect two-for-one stock split which was effective May 25, 2011.|
|(2)||Adjusted earnings represent earnings attributable to common shareholders adjusted for non-recurring or non-operating factors. Adjusted earnings and adjusted earnings per common share are non-GAAP measures that do not have any standardized meaning prescribed by GAAP.|
|(3)||Canadian Mainline includes deliveries ex-Gretna, Manitoba which is made up of United States and eastern Canada deliveries originating from western Canada.|
|(4)||Volumes are for the Athabasca mainline and Waupisoo Pipeline and exclude laterals on the Regional Oil Sands System.|
|(5)||Number of active customers is the number of natural gas consuming EGD customers at the end of the period.|
|(6)||Heating degree days is a measure of coldness that is indicative of volumetric requirements for natural gas utilized for heating purposes in EGD's franchise area. It is calculated by accumulating, for the fiscal period, the total number of degrees each day by which the daily mean temperature falls below 18 degrees Celsius. The figures given are those accumulated in the Greater Toronto Area.|