CALGARY, ALBERTA — (Marketwire) — 02/17/12 — HIGHLIGHTS
(all financial figures are unaudited and in Canadian dollars unless otherwise noted)
Enbridge Inc. (TSX: ENB) (NYSE: ENB) – “2011 was an excellent year for Enbridge with results reaching the top end of our adjusted earnings per share guidance, and a total return to our shareholders of 40%,” said Patrick D. Daniel, President and Chief Executive Officer, Enbridge Inc. (Enbridge or the Company). “Moreover, we remain confident that Enbridge can achieve an average annual growth rate in adjusted earnings per share of 10% through 2015, based on conservative assumptions for mainline throughput and future growth investment.
“In December 2011, we announced our 2012 guidance for adjusted earnings of $1.58 to $1.74 per share, the midpoint of which represents a 12% increase over 2011. Enbridge–s Board of Directors also approved a 15% increase to the 2012 dividend. Enbridge has increased its dividend by an average of 13% per year over the last five years.”
Mr. Daniel noted that Enbridge–s 2011 results were supported by growth across the company; growth that is expected to remain strong.
“Over the past several years, we have placed a significant number of projects into service, and are now benefiting from their stable earnings and cash flow generation. Our ability to continue to grow earnings and cash flow is supported by the ongoing success that we have had in securing new business development projects, including in 2011 alone, more than $8 billion of new projects. Enbridge has now compiled a large suite of attractive investment opportunities, including $13 billion of commercially secured projects that have or are expected to come into service between 2011 and 2015.”
Over the fourth quarter, Enbridge announced growth projects in its Liquids Pipelines, Gas Pipelines, Processing and Energy Services and green energy businesses.
A significant development in Liquids Pipelines was Enbridge–s acquisition in October of a 50% interest in the Seaway Crude Oil Pipeline (Seaway Pipeline), the subsequent announcement of the proposed reversal of that pipeline with partner Enterprise Products Partners L.P. (Enterprise) and the confirmation in December that Enbridge would proceed with the US$1.9 billion Flanagan South Pipeline component of its Gulf Coast Access initiative.
“Enbridge–s Gulf Coast Access initiative offers a near-term solution for shippers in western Canada and the Bakken to access the Texas Gulf Coast through the cost-effective and efficient use of existing facilities and rights-of-way,” said Mr. Daniel. “We are currently reviewing the commitments received from shippers through binding open seasons on the two components of the Gulf Coast Access project – the Flanagan South Pipeline and the Seaway Pipeline. Interest from shippers is strong and we anticipate providing additional information on capacity of the project in coming weeks.”
Enbridge and Enbridge Energy Partners, L.P. (EEP) also announced two projects – expansion of EEP–s Line 5 and reversal of Enbridge–s Line 9 between Sarnia, Ontario and Westover, Ontario – intended to provide increased access to refineries in the U.S. upper midwest and in Ontario for light crude oil produced in western Canada and the United States.
In Gas Pipelines, Processing and Energy Services, the fourth quarter marked Enbridge–s entry to the Canadian midstream natural gas sector with the securement of a 71% interest in the development of the Cabin Gas Plant (Cabin) in northeastern British Columbia. “Our investment in Cabin is a substantial initial step in the execution of our strategy to establish a strong position in the Canadian midstream business, focused on growing unconventional gas production in B.C. and Alberta and underpinned by low-risk contractual frameworks,” said Mr. Daniel.
The securement of a 50% interest in the development of the 300-megawatt (MW) Lac Alfred Wind Project (Lac Alfred) in Quebec brought Enbridge–s interests in renewable and alternative generating capacity close to 1,000 MW.
“The Lac Alfred project advances Enbridge–s strategy to invest in renewable energy infrastructure as part of a sustainable power generation platform with solid returns, stable cash flow and environmental benefits,” said Mr. Daniel. “Significantly, Lac Alfred marks Enbridge–s entry into the growing Quebec wind energy market, the second largest in Canada.
Mr. Daniel also commented on the Company–s focus on safety. “2011 was also a year of progress in further reinforcing safety and operational integrity across all Enbridge–s business units and this will remain the Company–s top priority in 2012. It is the safety and reliability of our assets that provides us with the foundation for our future growth.”
Concluded Mr. Daniel, “Across all of our businesses, Enbridge remains focused on offering investors a unique investment proposition: visible, transparent and sustained earnings and cash flow growth along with a substantial and growing dividend, all while maintaining a reliable business model.
“We were pleased to once again be named one of the Global 100 Most Sustainable Corporations in the world in January 2012. We take pride in being recognized for our emphasis on balancing economic growth with strong environmental stewardship, respect for our stakeholders and a commitment to conducting our business with the utmost integrity.”
RECENT DEVELOPMENTS
Earnings attributable to common shareholders were $991 million, or $1.32 per common share, for the year ended December 31, 2011 compared with $963 million, or $1.30 per common share, for the year ended December 31, 2010. Earnings for 2011 reflected strong earnings growth from substantially all of the Company–s business segments and also included the effect of non-cash, unrealized fair value derivative and foreign exchange gains and losses. Earnings for 2011 were also negatively impacted by non-recurring income taxes of $98 million incurred on an intercompany gain on sale to Enbridge Income Fund (the Fund), not eliminated for accounting purposes.
Significant contributions to increased earnings included, within Liquids Pipelines, the Regional Oil Sands System which realized an increase in earnings in 2011 relative to the prior year due to higher shipped volumes, increased tolls, the continued positive impact of terminal infrastructure additions and lower depreciation expense. Similarly, the Canadian Mainline delivered year-over-year growth on increasing volumes and favourable operating performance. Effective July 1, 2011, tolls on the mainline system are governed by the Competitive Toll Settlement (CTS), under which earnings are now subject to variability associated with throughput volume and capital and operating costs, subject to various protection mechanisms. Within the Gas Processing, Pipelines and Energy Services segment, Energy Services benefited from favourable market conditions as did Aux Sable which realized stronger fractionation margins compared with prior years. Also within this segment, earnings contributions were realized from newly sanctioned renewable energy projects including the Sarnia Solar and Talbot Wind projects, later transferred to the Fund, within Sponsored Investments, in the fourth quarter of the year, and the Cedar Point and Greenwich wind projects. EEP earnings, within Sponsored Investments, increased for the year ended December 31, 2011, largely due to higher volumes both within EEP–s liquids business and natural gas business, which was bolstered by the addition of the Elk City System acquired in September 2010, and higher incentive income. Offsetting these increases in earnings were lower contributions from Southern Lights Pipeline and Spearhead Pipeline, which is experiencing lower volumes due to market pricing dynamics at Cushing, Oklahoma, and higher Corporate costs. Enbridge Offshore Pipelines (Offshore) earnings declined $30 million in 2011 relative to the prior year due to a slower regulatory permitting process and delayed drilling programs by producers in the Gulf of Mexico.
Additionally, 2011 and 2010 results were impacted by the 2010 Line 6A and 6B crude oil releases. Earnings for the year ended December 31, 2011 and 2010 included the Company–s share of EEP–s costs, before insurance recoveries and excluding fines and penalties, of $33 million and $103 million, respectively, related to these incidents. Lost revenue associated with downtime on both Line 6A and 6B of $3 million (net to Enbridge) further contributed to a decrease in earnings in 2010. Earnings for the year ended December 31, 2011 included insurance recoveries of $50 million (net to Enbridge) related to the Line 6B crude oil release.
Earnings attributable to common shareholders for the three months ended December 31, 2011 were $335 million compared with $326 million for the fourth quarter of 2010. Fourth quarter earnings drivers are largely consistent with year-to-date trends and continued to include non-cash, unrealized fair value derivative and foreign exchange gains and losses. Unique to the fourth quarter of 2011 are reduced earnings from Gas Distribution due to warmer than normal weather, insurance recoveries of $29 million (net to Enbridge) related to the Line 6B crude oil release and $98 million of income taxes on the intercompany gain on sale to the Fund not eliminated for accounting purposes.
Non-GAAP Measures
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 standardized meanings prescribed by Canadian generally accepted accounting principles (GAAP) and are not considered GAAP measures; therefore, these measures may not be comparable with similar measures presented by other issuers. See Non-GAAP Reconciliations section on page 12 for a reconciliation of the GAAP and non-GAAP measures.
1. Comparative amounts were restated to reflect two-for-one stock split which was effective May 25, 2011.
2. Adjusted earnings and adjusted earnings per common share are non-GAAP measures that do not have any standardized meaning prescribed by generally accepted accounting principles. For more information on non-GAAP measures see above.
Adjusted earnings for the year ended December 31, 2011 were $1,110 million, or $1.48 per common share, compared with $984 million, or $1.33 per common share, for the year ended December 31, 2010, an increase of 11% in adjusted earnings per common share. Adjusted earnings, which excludes the impact of non-recurring or non-operating items, for the year ended December 31, 2011 surpassed $1.0 billion for the first time in the Company–s history, with higher contributions from substantially all of the Company–s business segments driving strong overall earnings growth in the year. Significant drivers of the increase in adjusted earnings included increased volumes on the Company–s liquids pipelines assets both in Canada and the United States, supported by robust activity in the oil sands region of Alberta, favourable fractionation margins and market conditions benefiting the Aux Sable and Energy Services businesses and increased contributions from a growing portfolio of renewable power generation assets. Areas of the Company–s operations which realized year-over-year declines in adjusted earnings included Offshore, due to a slower regulatory permitting process and delayed drilling programs by producers in the Gulf of Mexico, and Spearhead Pipeline, which experienced lower volumes due to market pricing dynamics at Cushing, Oklahoma.
Adjusted earnings were $275 million, or $0.37 per common share, for the three months ended December 31, 2011 compared with $238 million, or $0.32 per common share, for the three months ended December 31, 2010. Positive contributors to increased adjusted earnings in the quarter included Gas Pipelines, Processing and Energy Services, whose Aux Sable and Energy Services businesses continued to benefit from favourable margins in the period, and Regional Oil Sands System which realized higher shipped volumes. Adjusted earnings from Sponsored Investments increased in the fourth quarter of 2011 due to strong results from EEP–s natural gas business and higher general partner incentive income. Partially offsetting these items are lower adjusted earnings from Gas Distribution owing to lower other income. Commencing the fourth quarter of 2011, adjusted earnings from the Ontario Wind, Sarnia Solar and Talbot Wind projects are included within Sponsored Investments following the transfer of these assets to the Fund. These assets were previously reported under Gas Pipelines, Processing and Energy Services.
Liquids Pipelines earnings were impacted by the following non-recurring or non-operating adjusting items.
Gas Distribution earnings were impacted by the following non-recurring or non-operating adjusting item.
Gas Pipelines, Processing and Energy Services earnings were impacted by the following non-recurring or non-operating adjusting items.
Sponsored Investments earnings were impacted by several non-recurring or non-operating adjusting items.
Corporate costs were impacted by the following non-recurring or non-operating adjusting items.
CONFERENCE CALL
Enbridge will hold a conference call on Friday, February 17, 2012 at 9:00 a.m. Eastern Time (7:00 a.m. Mountain Time) to discuss the 2011 annual results. Analysts, members of the media and other interested parties can access the call at 617-614-3518 or toll-free at 1-800-561-2601 using the access code of 16165125. The call will be audio webcast live at . 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 80524503) will be available until February 24, 2012.
The conference call will begin with a presentation by the Company–s Chief Executive Officer and Chief Financial Officer followed by a question and answer period for investment analysts. A question and answer period for members of the media will immediately follow.
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 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. As a generator of energy, Enbridge has interests in more than 1,150 megawatts of renewable and alternative energy generating capacity and is expanding its interests in wind and solar energy, geothermal and hybrid fuel cells. Enbridge employs approximately 6,900 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 . None of the information contained on, or connected to, Enbridge–s website is incorporated in or otherwise part of this news release.
Forward-Looking Information
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 tariffs for pipelines; 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, NGLs; prices of crude oil, natural gas and NGLs; 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 NGLs, 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.
Contacts:
Enbridge Inc.
Jennifer Varey
Media
(403) 508-6563 or Toll Free: 1-888-992-0887
Enbridge Inc.
Jody Balko
Investment Community
(403) 231-5720