Enbridge Inc.
TSX : ENB
NYSE : ENB

Enbridge Inc.

May 11, 2011 07:01 ET

Enbridge Reports First Quarter Adjusted Earnings of $334 million or $0.89 per Common Share

CALGARY, ALBERTA--(Marketwire - May 11, 2011) -

HIGHLIGHTS

(all financial figures are unaudited and in Canadian dollars)

- First quarter earnings increased 15% to $393 million

- First quarter adjusted earnings increased 5% to $334 million

- Agreement reached with shippers for 10-year Competitive Toll Settlement on Canadian Mainline system

- $600 million of investments in renewable power, U.S. natural gas gathering and processing, Quebec gas distribution, and Ontario storage were initiated since the beginning of the year

- 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) "The steady performance of Enbridge's liquids pipelines, gas transportation, gas distribution and green energy businesses continued to deliver solid earnings for the Company and its shareholders during the first quarter," said Patrick D. Daniel, President and Chief Executive Officer. "With first quarter adjusted earnings of $334 million, or $0.89 per share, we are starting the year a little stronger than we had expected and so we are firmly on track to achieve our full year adjusted earnings guidance of $2.75 to $2.95 per share.

"The dividend paid in the first quarter of 2011 represented a 15% increase, reflecting sustained strong growth in 2010, and we expect future dividend growth to continue to benefit from strong growth in earnings and cash flow per share."

A significant achievement in the first quarter, and one that is expected to contribute to the long-term sustainability of earnings from Enbridge's Canadian Mainline system, was the agreement reached with shippers on a 10-year Competitive Toll Settlement (CTS).

"We are very pleased with the settlement we've reached. The CTS builds on what has been a long-standing history of successful incentive arrangements between Enbridge and the shipping community, and will even further align the interests of Enbridge and our shippers for the next 10 years," said Mr. Daniel. "The CTS will provide a stable and competitive toll to shippers. Compared to competing alternatives, the CTS will ensure Western Canadian producers receive the strongest pricing and Midwestern US refiners the lowest supply cost. As such, the CTS reinforces the competitive position of our mainline system, enabling us to preserve and enhance throughput."

CTS provides Enbridge with a powerful strategic tool to capture incremental volumes through market extensions that can be accessed from Enbridge's mainline system through new or existing downstream pipelines.

"We're confident that this agreement will enable us to continue to deliver attractive returns under conservative throughput assumptions, further reinforcing our expectation of a 10% average growth rate in adjusted earnings per share through the middle of this decade."

Growth initiatives in the first quarter included the acquisition of the Amherstburg and Tilbury solar projects in Ontario, adding a combined 20 MW of renewable generating capacity to Enbridge's green energy portfolio. In gas transportation, the Company announced the US$150 million expansion of the condensate processing capacity of its Venice, Louisiana facility to accommodate additional offshore natural gas production. Enbridge will increase its interests in gas distribution and gas pipelines in Quebec, and gas and electric power distribution and transmission assets in Vermont, through an increased investment in Noverco. The $145 million investment, which brings Enbridge's total interest in Noverco to 38.9%, is expected to close later in the year once all regulatory approvals have been received. Enbridge Gas Distribution (EGD) commenced expansion of its unregulated natural gas storage capacity during the quarter. Last week, Enbridge Energy Partners, L.P. announced plans to invest an additional US$0.2 billion to expand its East Texas system.

"We have substantial balance sheet capacity for financing our large suite of secured projects plus those under development," said Mr. Daniel. "We brought $12 billion in projects into service over the past three years, we have secured more than $6 billion in projects that will come into service between 2011 and 2014 and have another $30 billion under development. The recently announced proposed transfer of three of our Ontario renewable energy projects to Enbridge Income Fund for $1.3 billion would further reinforce our financial capacity to undertake the large suite of attractive investment opportunities we are developing."

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.

"Over the course of 2011, and beyond, we expect to continue to deliver on our investment proposition, said Mr. Daniel. "Enbridge offers visible and sustained earnings growth, a substantial and growing dividend and a reliable business model - a unique and proven combination of attributes that delivers superior returns to our investors."

Mr. Daniel will address investors at Enbridge's Annual and Special Meeting of Shareholders this afternoon. Shareholders will vote on various matters including a proposed two-for-one stock split.

FIRST QUARTER 2011 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.

- Enbridge's first quarter results included earnings from assets placed into service in 2010, including Alberta Clipper and Southern Lights Pipeline, as well as the Enbridge Energy Partners, L.P. (EEP) acquisition of the Elk City System in September 2010. The Company benefited from positive or stable earnings contributions from all of its business segments.

- On May 4, 2011, a proposal by Enbridge to Enbridge Income Fund (the Fund) to transfer three renewable energy assets to the Fund at an aggregate price of $1.3 billion was announced. The proposed transfer is subject to all necessary approvals including approval by the Board of Trustees of the Fund, the Board of Directors of Enbridge Income Fund Holdings Inc. (ENF) and regulatory approval. ENF and the Fund have formed a joint special committee comprised of independent trustees and directors to review the proposal and make recommendations to their respective Boards. If approved and completed, the transfer would further reinforce Enbridge's financial capacity to undertake attractive investment opportunities under development.

- On April 28, 2011, EEP announced that it plans to invest an additional $0.2 billion to expand its East Texas system. EEP has signed long-term agreements with several major natural gas producers on the Texas side of the Haynesville shale to provide gathering, treating and transmission services. The projects involve construction of gathering and related market outlet pipelines and related treating facilities.

- On March 16, 2011, Enbridge announced that agreement had been reached with shippers on its Canadian Mainline system with respect to the principal terms of a 10-year CTS. The CTS, which remains subject to approval by the National Energy Board (NEB), was filed with the NEB on May 2, 2011 and is intended to be effective July 1, 2011.

The CTS covers local tolls to be charged for service on the Canadian Mainline and supersedes all existing toll agreements on the Canadian Mainline during the term of the CTS. Under the terms of the CTS, the initial Canadian local toll will be based on the 2011 Incentive Tolling Settlement (ITS) recently approved by the NEB. The Canadian local toll will then be adjusted by 75% of the Canada Gross Domestic Product at Market Price Index for each of the remaining nine years of the settlement. Local tolls for service on the Lakehead System (the portion of the mainline in the United States that is owned by the Company's affiliate EEP) will not be affected by the CTS and will continue to be established by EEP's existing toll agreements. The CTS also provides for an International Joint Tariff (IJT) for crude oil shipments originating in Canada on the Canadian Mainline and delivered in the United States off the Lakehead System and into Eastern Canada. The IJT is designed to provide mainline shippers with a stable and competitive long-term toll, preserving and enhancing throughput on both the Canadian Mainline and Lakehead System. If the CTS is approved by the NEB, the shippers who initiated the Alberta Clipper hearing request with the NEB will withdraw their complaints.

- In February, Enbridge announced that its Board of Directors will recommend that shareholders approve a two-for-one stock split at the Company's Annual and Special Meeting of Shareholders on May 11, 2011. In addition to shareholder approval, the stock split is subject to regulatory approvals. Upon completion of the stock split, the number of outstanding common shares would double from approximately 387 million to approximately 774 million.

- Enbridge announced on February 3, 2011 that it will invest $0.1 billion to acquire an additional 6.8% interest in Noverco, bringing its total interest in Noverco to 38.9%. The transaction is expected to close later in the year once all regulatory approvals have been received. Noverco is a holding company that owns 71% of the Gaz Metro Limited Partnership which owns gas distribution and gas pipelines assets in the province of Quebec and gas and electric power distribution and transmission assets in the State of Vermont.

- On February 1, 2011, Enbridge announced agreements to acquire two new solar energy projects totaling 20 MW generating capacity from First Solar Inc. (First Solar) for $0.1 billion. The 5-MW Tilbury Solar Project, completed in December 2010, is located in Tilbury, Ontario. The Amherstburg II Solar Project, located in Amherstburg, Ontario, consists of two separate facilities that, together, total 15 MW. First Solar constructed (and, in the case of the Amherstburg II Solar Project, is constructing) the projects for Enbridge under fixed price engineering, procurement and construction contracts. The Amherstburg II Solar Project is expected to be complete in the third quarter of 2011. Enbridge will sell the facilities' power output to the Ontario Power Authority pursuant to 20-year Power Purchase Agreements under the terms of the Ontario Government's Renewable Energy Standard Offer Program.

- On January 31, 2011, Enbridge announced plans for an estimated US$0.2 billion expansion of the condensate processing capacity of its Venice, Louisiana facility within its offshore gas business. The expanded condensate processing capacity will be required to accommodate additional natural gas production from the recently sanctioned Olympus offshore oil and gas development. Natural gas production from Olympus will move to Enbridge's onshore facility at Venice via Enbridge's Mississippi Canyon offshore pipeline where it will be processed to separate and stabilize the condensate. The expansion, which will more than double the capacity of the facility to approximately 12,000 barrels of condensate per day, is expected to be in service in late 2013.

- During the first quarter of 2011, Enbridge commenced execution of the Nexus Project, which is a 4.5 billion cubic feet (bcf) expansion of EGD's unregulated natural gas storage facility at Tecumseh, near Sarnia, Ontario. The project is secured by a long-term commercial contract and construction will begin in the second quarter of 2011 and finish early in the fourth quarter of 2011. The project, with an expected capital cost of $42 million, has received regulatory approval and is currently on schedule.

DIVIDEND DECLARATION

On April 28, 2011, the Enbridge Board of Directors declared quarterly dividends of $0.49 per common share and $0.34375 per Series A Preferred Share. Both dividends are payable on June 1, 2011 to shareholders of record on May 13, 2011.

CONFERENCE CALL

Enbridge will hold a conference call on Wednesday, May 11, 2011 at 9:00 a.m. Eastern time (7:00 a.m. Mountain time) to discuss the first quarter 2011 results. Analysts, members of the media and other interested parties can access the call at +617-614-3922 or toll-free at 1-800-291-5365 using the access code of 96103684. The call will be audio webcast live at www.enbridge.com/InvestorRelations.aspx. 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 29951201) will be available until May 18, 2011.

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.

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 growing involvement in the natural gas transmission and midstream businesses, and is expanding its interests in renewable and green energy technologies including wind and solar energy, hybrid fuel cells and carbon dioxide sequestration. 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 approximately 6,400 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

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 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; prices of crude oil, natural gas and natural gas liquids; 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 natural gas liquids, and the prices of these commodities, are material to and underlay 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.

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 a standardized meaning prescribed by Canadian generally accepted accounting principles (Canadian 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 for a reconciliation of the GAAP and non-GAAP measures.


HIGHLIGHTS                                                                  
                                                         Three months ended 
                                                               March 31,    
                                                         -------------------
                                                          2011         2010 
----------------------------------------------------------------------------
(unaudited; millions of Canadian dollars, 
 except per share amounts)                      
Earnings Attributable to Common Shareholders                                
 Liquids Pipelines                                         136          134 
 Gas Distribution                                          103           80 
 Gas Pipelines, Processing and Energy Services              51           24 
 Sponsored Investments                                      59           52 
 Corporate                                                  44           52 
----------------------------------------------------------------------------
                                                           393          342 
 Earnings per Common Share                                1.05         0.93 
 Diluted Earnings per Common Share                        1.04         0.92 
----------------------------------------------------------------------------
Adjusted Earnings(1)                                                        
 Liquids Pipelines                                         136          134 
 Gas Distribution                                           92           88 
 Gas Pipelines, Processing and Energy Services              39           39 
 Sponsored Investments                                      57           51 
 Corporate                                                  10            6 
----------------------------------------------------------------------------
                                                           334          318 
 Adjusted Earnings per Common Share                       0.89         0.86 
----------------------------------------------------------------------------
Cash Flow Data                                                              
 Cash provided by operating activities                     957          646 
 Cash used in investing activities                        (465)        (629)
 Cash provided by/(used in) financing activities          (378)          84 
----------------------------------------------------------------------------
Dividends                                                                   
 Common share dividends declared                           188          161 
 Dividends paid per common share                         0.490        0.425 
----------------------------------------------------------------------------
Shares Outstanding (millions)                                               
 Weighted average common shares outstanding                375          368 
 Diluted weighted average common shares outstanding        379          371 
----------------------------------------------------------------------------
Operating Data                                                              
 Liquids Pipelines - Average Deliveries 
  (thousands of barrels per day)                    
  Canadian Mainline(2)                                   2,320        2,054 
  Regional Oil Sands System(3)                             327          236 
  Spearhead Pipeline                                       160          112 
  Olympic Pipeline                                         253          254 
Gas Distribution - Enbridge Gas Distribution                                
  Volumes (billions of cubic feet)                         193          166 
  Number of active customers (thousands)(4)              1,991        1,957 
  Heating degree days(5)                                                    
   Actual                                                1,966        1,726 
   Forecast based on normal weather                      1,802        1,763 
Gas Pipelines, Processing and Energy Services -                             
  Average Throughput Volume (millions of cubic 
   feet per day)                        
   Alliance Pipeline US                                  1,677        1,680 
   Vector Pipeline                                       1,750        1,518 
   Enbridge Offshore Pipelines                           1,751        2,004 
----------------------------------------------------------------------------

1.  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.
2.  Canadian Mainline includes deliveries in Western Canada and to the
    Lakehead System at the United States border as well as Line 8 and Line 9
    in Eastern Canada.
3.  Volumes are for the Athabasca mainline and Waupisoo Pipeline and exclude
    laterals on the Regional Oil Sands System.
4.  Number of active customers is the number of natural gas consuming
    Enbridge Gas Distribution customers at the end of the period.
5.  Heating degree days is a measure of coldness that is indicative of
    volumetric requirements for natural gas utilized for heating purposes in
    Enbridge Gas Distribution'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.

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