CALGARY, Dec. 11, 2018 /PRNewswire/ - Enbridge Inc.
(Enbridge or the Company) (TSX:ENB)(NYSE:ENB) today announced an
update to its strategic plan and longer range financial outlook.
The following summarizes the key elements of the updated plan and
related actions, which will be further discussed at the Company's
investor conference today in New
York.
Highlights
- A 10% increase in the Company's common share dividend to
$2.95 annually, effective the first
quarter of 2019.
- Re-affirmation of the Company's three-year 2018 – 2020
distributable cash flow (DCF) per share guidance, with mid-points
of $4.45 and $5.00 for 2019 and 2020, respectively.
- Positioning of the Liquids Pipelines Mainline system for the
future through a long-term contract and tolling offering as well as
through a variety of throughput optimizations.
- Announcement of $1.8B of newly
secured growth capital in the Liquids Pipelines and Gas
Transmission businesses.
- A 5%-7% post-2020 annual distributable cash flow per share
growth target based on a fully self-funded model requiring no
additional common equity.
- Further simplification of the Company's debt funding structure
and a strategy to reduce structural subordination and further
enhance the consolidated credit profile.
Strategic Priorities
Enbridge established several
strategic priorities last year in order to complete its
transformation to a low-risk regulated pipeline and utility
profile. In 2018, the company re-focused on its three strong core
businesses, each with a best-in-class asset base: Gas Transmission,
Liquids Pipelines, and Regulated Gas Distribution. Accelerated
de-leveraging actions and targets were achieved ahead of schedule
while the Company continued to execute one of the pipeline
industry's largest commercially secured growth capital programs.
Enbridge's key strategic priorities for 2019 and beyond remain
largely unchanged:
- Focusing on the safety, operational reliability and
environmental performance of our systems and ensuring cost
effective and efficient transportation for our
customers;
- Ensuring strong execution of our secured capital program that
will drive DCF per share growth through 2020;
- Concentrating on growth of core businesses through extensions
and expansions of our liquids pipeline, natural gas transmission
and gas utility franchises to extend growth beyond 2020;
- Further strengthening our financial position and flexibility as
secured growth projects are brought on line;
- Continuing to exercise rigorous capital allocation to maximize
value as we move to a significant positive free cash flow position
(net of dividends and maintenance spending) in 2020.
Commenting on the strategic plan and outlook, Al Monaco, President and CEO of Enbridge noted:
"2018 has been a year of significant accomplishments for our
Company. We shed non-core lines of business, de-levered the balance
sheet, advanced our secured growth projects, streamlined our
corporate structure, and with all that we expect to generate DCF
per share in the upper half of our 2018 guidance range and maintain
our previous three-year guidance range through 2020."
"Our strategic positioning as a low-risk regulated pipeline and
utility business, combined with the strategic priorities we
established last year, are bearing fruit. We will remain focused on
these priorities while placing an even greater emphasis on
capturing the very best of a large suite of potential organic
growth opportunities that we see being driven by our great
strategic position and excellent energy fundamentals, particularly
growing energy exports from North
America.
"We'll continue to apply the same type of discipline around
capital allocation that we exercised this year as we created
financial flexibility by selling assets that weren't core to our
strategy at strong valuations.
"We'll also look to continue to optimize the performance of our
core business. It's a top priority to further extend the consistent
long-term growth track record of our Liquids business by providing
new win-win tolling options and low-cost throughput enhancements on
our Mainline."
In summarizing the strategic update, Mr. Monaco commented, "We
will stay focused on our strategic priorities as we look to build
on the success of 2018. We're confident our best-in-class assets
and low-risk business model will generate shareholder value as we
continue to deliver on our plans."
Guidance, Dividend Increase and Long-Term Growth
Outlook
Enbridge continues to expect 2018 DCF per share in
the upper half of its guidance range of $4.15 to $4.45 per
share. The 2019 and 2020 mid-point of the projected range of DCF is
unchanged from last year at $4.45 per
share and $5.00 per share,
respectively. With this robust outlook, Enbridge has announced a
10% dividend increase for 2019 and anticipates another 10% increase
for 2020. The 2019 quarterly dividend of $0.738 per share will be payable on March 1, 2019, to shareholders of record on
February 15, 2019.
Beyond 2020, Enbridge is targeting to achieve annual DCF per
share growth in the range of 5%-7%, driven by an attractive suite
of organic growth prospects within its three core businesses that
can be self-funded using available cash generated by these
businesses and managing leverage within targets designed to
maintain strong investment grade credit ratings.
Liquids Mainline Tolling and Pipeline Throughput
Enhancements
Enbridge is working hard to provide solutions
for Western Canadian pipeline capacity shortages while offering
shippers greater long-term certainty. The company is in discussions
with its shippers for a new Mainline tolling agreement to replace
the current 10-year Competitive Tolling Settlement (CTS) that
expires in mid-2021. Key features of the toll proposal under
discussion include priority access for contracted volume, contract
terms of up to 20 years, and spot capacity availability of at least
10%. Discussions will continue in 2019 with a targeted
implementation date aligning with the expiry of the CTS agreement
in mid-2021.
Enbridge is also developing several low-cost throughput
enhancements as potential solutions for the Western Canadian crude
oil transportation bottleneck. The Company believes that it can
increase throughput by 50 to 100 kbpd on a short-term basis by the
end of the first half of 2019. Completion of the Line 3 replacement
project will create another 370 kbpd of capacity late next year.
Beyond that, the Company is advancing another 450 kbpd of
throughput optimization initiatives, capacity restoration and
supply access for Western Canadian Sedimentary Basin barrels.
Mr. Monaco commented, "Enbridge has a strong track record of
delivering additional throughput to the basin, through creative
solutions. We've created 450 kbpd of enhancements since 2015. These
types of projects are attractive to both our customers and our
shareholders as they are low-cost, carry minimal permitting risk
and have a much shorter development cycle. I'm confident that
beyond 2020, further optimization and market extensions to the U.S.
Gulf Coast will drive continued sustained growth for our Liquids
Pipelines business."
New Growth Capital Investments
Today Enbridge is
announcing $1.8 billion of new
accretive growth capital investments:
- Gray Oak Pipeline – Enbridge will invest US$600 million for a 22.75% interest in the Gray
Oak Liquids Pipeline, which will deliver light crude oil from the
Permian Basin to Corpus Christi and other markets. Gray Oak, currently under construction, is
expected to begin service in late 2019, contribute to the post-2020
growth outlook and is an important component of Enbridge's broader
emerging U.S. Gulf Coast liquids infrastructure strategy.
- Cheecham Terminal & Pipeline – Enbridge is acquiring
existing liquids pipeline and terminal assets connected with
Athabasca Oil Corporation's Leismer SAGD oil sands assets for
$265 million. The assets are
synergistic as they are connected with Enbridge's existing terminal
and pipeline assets in the region.
- Gas Transmission Expansions – Enbridge will invest
approximately $800 million on four
Gas Transmission expansion projects coming into service in the
2020-23 timeframe. The Vito Offshore Pipelines will provide service
to Shell's offshore Gulf Coast operations. The Cameron Lateral
expansion project will connect Texas Eastern with Gulf Coast LNG
export facilities. In addition, the Gulfstream as well as the Sabal Trail
Pipelines into Florida will both
undergo additional expansion (Phase VI and Phases 2 & 3
respectively). All of these expansion projects are being
constructed under long-term take-or-pay commercial
arrangements.
"These investments are directly in the middle of our investment
fairway and strategy," said Mr. Monaco. "They further build out our
liquids and natural gas franchises under contracted low-risk
commercial frameworks. In combination with currently secured growth
projects and organic expansion opportunities under development,
they will support the near-term and post-2020 outlook."
Structural Simplification
Enbridge continues to make
progress on the buy-in of the public's interest in its Sponsored
Vehicles and related debt restructuring. The buy-in of Enbridge
Income Fund Holdings (ENF) was completed on November 8, 2018. The buy-in of Spectra Energy
Partners LP (SEP) will close the week of December 17, 2018, in accordance with the consent
solicitation process established for that transaction. The
unitholder and shareholder votes for Enbridge Energy Partners, L.P.
(EEP) and Enbridge Energy Management, LLC (EEQ) are scheduled for
December 17.
The buy-ins provide an opportunity for the Company to further
simplify its debt financing structure and strategy upon elimination
of the public's interest in its Sponsored Vehicles. As announced
last week, a majority of holders of $1.6
billion of term debt securities of Enbridge Income Fund have
agreed to exchange their notes for notes of Enbridge Inc. with
identical coupons and terms to maturity. The completion of this
debt exchange is expected to occur prior to year-end. After the
exchange, Enbridge Income Fund will no longer raise debt externally
from third parties.
Upon closing of their respective buy-in transactions, external
debt issuance by SEP and EEP would also be discontinued. Subject to
the buy-in transactions being completed, the Company also plans to
implement a cross guarantee arrangement whereby remaining
outstanding senior term debt obligations of EEP and SEP would be
guaranteed by Enbridge Inc., while each of SEP and EEP would each
provide "upstream" guarantees of Enbridge Inc.'s senior term debt
obligations.
The cross guarantees would be implemented in conjunction with a
consent solicitation process to amend certain covenants in the EEP
and SEP term debt trust indentures. The Company believes that these
changes to its debt issuance structure and funding strategy will
substantially reduce structural subordination and further enhance
the credit profile of the consolidated Enbridge group.
Details of Enbridge's Investor Conference:
Enbridge
will hold its annual investor conference to discuss the Company's
strategic plan and financial outlook at 8:30
a.m. ET on Tuesday, December 11 in New York
City.
The conference will be webcast live on the Company's website and
can be accessed via the following link:
https://www.enbridge.com/investment-center/events-and-presentations
About Enbridge Inc.
Enbridge Inc. is North America's premier energy
infrastructure company with strategic business platforms that
include an extensive network of crude oil, liquids and natural gas
pipelines, regulated natural gas distribution utilities and
renewable power generation. The Company safely delivers an average
of 2.9 million barrels of crude oil each day through its Mainline
and Express Pipeline; accounts for approximately 62% of U.S.-bound
Canadian crude oil exports; and moves approximately 22% of all
natural gas consumed in the U.S., serving key supply basins and
demand markets. The Company's regulated utilities serve
approximately 3.7 million retail customers
in Ontario, Quebec, and New Brunswick. Enbridge also
has interests in more than 1,700 MW of net renewable generating
capacity in North America and Europe. The Company
has ranked on the Global 100 Most Sustainable Corporations index
for the past nine years; its common shares trade on
the Toronto and New York stock exchanges under
the symbol ENB.
Life takes energy and Enbridge exists to fuel people's
quality of life. For more information,
visit www.enbridge.com.
Forward Looking Information
This news release includes certain forward looking statements
and information (FLI) to provide potential investors and
shareholders of Enbridge Inc. (Enbridge or the Company) with
information about Enbridge and its subsidiaries and affiliates,
including management's assessment of their future plans and
operations, which FLI may not be appropriate for other purposes.
FLI is typically identified by words such as "anticipate",
"expect", "project", "estimate", "forecast", "plan", "intend",
"target", "believe", "likely" and similar words suggesting future
outcomes or statements regarding an outlook. All statements other
than statements of historical fact may be FLI. In particular, this
presentation contains FLI pertaining to, but not limited to,
information with respect to the following: strategic priorities and
guidance; expected DCF and DCF/share; expected free cash flow;
annual dividend growth and anticipated dividend increases;
financial flexibility; funding requirements and strategy; financing
sources, plans and targets; credit profile; capital allocation;
secured growth projects and future growth, development and
expansion program and opportunities; future business prospects and
performance, including organic growth outlook; closing of announced
financing, acquisitions, dispositions, amalgamations and corporate
simplification and sponsored vehicle transactions, including
sponsored vehicle debt restructuring, and the timing, expected
benefits and impact thereof; synergies, integration and
streamlining plans; project execution, including capital costs,
expected construction and in service dates and expected regulatory
approvals; system throughput, capacity, expansions and potential
future capacity solutions, including optimizations and reversals;
tolling proposals and the timing and impact thereof; and industry
and market conditions.
Although we believe that the FLI is reasonable based on the
information available today and processes used to prepare it, such
statements are not guarantees of future performance and you are
cautioned against placing undue reliance on FLI. By its nature, FLI
involves a variety of assumptions, which are based upon factors
that may be difficult to predict and that may involve 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 the FLI, including,
but not limited to, the following: expected future DCF and DCF per
share; estimated future dividends; financial strength and
flexibility; debt and equity market conditions, including the
ability to access capital markets on favourable terms or at all;
cost of debt and equity capital; credit ratings; capital project
funding; the expected supply of, demand for and prices of crude
oil, natural gas, natural gas liquids and renewable energy;
economic and competitive conditions; exchange rates; inflation;
interest rates; changes in tax laws and tax rates; changes in trade
agreements; completion of growth projects; anticipated construction
and in-service dates; availability and price of labour and
construction materials; operational reliability and performance;
changes in tariff rates; customer and regulatory approvals;
maintenance of customer and other stakeholder support and
regulatory approvals for projects; weather; governmental
legislation; announced and potential financing, acquisition,
disposition, amalgamation and corporate simplification
transactions, and the timing and impact thereof; impact of capital
project execution on the Company's future cash flows; the ability
of management to execute key priorities; and the effectiveness of
various actions resulting from the Company's strategic priorities.
We caution that the foregoing list of factors is not exhaustive.
Additional information about these and other assumptions, risks and
uncertainties can be found in applicable filings with Canadian and
U.S. securities regulators (including the most recently filed Form
10-K and any subsequently filed Form 10-Q, as applicable). Due to
the interdependencies and correlation of these factors, as well as
other factors, the impact of any one assumption, risk or
uncertainty on FLI cannot be determined with certainty.
Except to the extent required by applicable law, we assume no
obligation to publicly update or revise any FLI made in this
presentation or otherwise, whether as a result of new information,
future events or otherwise. All FLI in this presentation and all
subsequent FLI, whether written or oral, attributable to Enbridge,
or any of its subsidiaries or affiliates, or persons acting on
their behalf, are expressly qualified in its entirety by these
cautionary statements.
Non-GAAP Measures
This news release makes reference to non-GAAP measures,
including distributable cash flow (DCF) and DCF per share. DCF is
defined as cash flow provided by operating activities before
changes in operating assets and liabilities (including changes in
environmental liabilities) less distributions to non-controlling
interests and redeemable non-controlling interests, preference
share dividends and maintenance capital expenditures, and further
adjusted for unusual, non-recurring or non-operating factors.
Management uses DCF to assess performance and to set its dividend
or distribution payout target. Management believes the presentation
of these measures gives useful information to investors and
shareholders as they provide increased transparency and insight
into the performance of Enbridge and its subsidiaries and
affiliates. Reconciliations of forward looking non-GAAP financial
measures to comparable GAAP measures are not available due to the
challenges and impracticability with estimating some of the items,
particularly with estimates for certain contingent liabilities, and
estimating non-cash unrealized derivative fair value losses and
gains and ineffectiveness on hedges which are subject to market
variability and therefore a reconciliation is not available without
unreasonable effort.
These measures are not measures that have a standardized
meaning prescribed by generally accepted accounting principles in
the United States of America (U.S.
GAAP) and may not be comparable with similar measures presented by
other issuers. A reconciliation of historical non-GAAP measures to
the most directly comparable GAAP measures is available on the
Company's website. Additional information on non-GAAP measures may
be found in the Company's earnings news releases or in additional
information on the Company's website, www.sedar.com or
www.sec.gov.
FOR FURTHER INFORMATION PLEASE CONTACT:
Media
|
Investment
Community
|
Jesse
Semko
|
Jonathan
Gould
|
Toll Free: (888)
992-0997
|
Toll Free: (800)
481-2804
|
Email:
media@enbridge.com
|
Email:
investor.relations@enbridge.com
|
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SOURCE Enbridge Inc.