Enbridge Inc.
TSX : ENB
NYSE : ENB

Enbridge Inc.

August 05, 2011 07:00 ET

Enbridge Reports Second Quarter Adjusted Earnings of $260 Million or $0.35 Per Common Share

CALGARY, ALBERTA--(Marketwire - Aug. 5, 2011) -

HIGHLIGHTS

(all financial figures are unaudited and in Canadian dollars)


--  Second quarter earnings were $259 million; six month earnings were $652
    million, or $0.87 per common share 

--  Second quarter and six month adjusted earnings increased to $260
    million, or $0.35 per common share, and $594 million, or $0.79 per
    common share, respectively 

--  10-year Competitive Toll Settlement (CTS) on crude oil mainline system
    approved in June 2011 

--  Two-for-one stock split approved by shareholders became effective May
    25, 2011 

Enbridge Inc. (TSX:ENB) (NYSE:ENB) - "During the second quarter we continued to run slightly ahead of our original expectations and the outlook for the full year is now trending toward the upper half of our adjusted earnings per share guidance range of $1.38 to $1.48," said Patrick D. Daniel, President and Chief Executive Officer.

In June, the National Energy Board (NEB) approved the 10-year CTS agreement, which took effect on July 1, 2011. The CTS covers the local tolls to be charged for service on the Canadian portion of the mainline system as well as provides for an International Joint Tariff (IJT) for United States deliveries originating in Canada.

"We are pleased with the decision of the NEB and look forward to implementing this long-term agreement to the mutual benefit of Enbridge and our shippers," said Mr. Daniel. "The CTS will provide a stable and competitive long-term toll for crude volumes received into the Canadian Mainline System and delivered to points both within Canada and the U.S. This agreement will enable us to continue to deliver reliable earnings and dividends with attractive returns under conservative throughput assumptions, further reinforcing our confidence in our ability to deliver a 10% average annual growth rate in earnings per share through the middle of this decade.

"The CTS will also facilitate market extensions that can be accessed from our mainline system through new or existing downstream pipelines," said Mr. Daniel. "In fact, we have already found it to be a catalyst in advancing business development opportunities to extend our traditional market reach."

Over the second quarter, Enbridge continued to advance a number of growth projects including existing Liquids Pipelines projects in the Oil Sands region. Construction is continuing on projects including the Christina Lake Lateral, Woodland Pipeline, Wood Buffalo Pipeline, and the Waupisoo Pipeline and Athabasca Pipeline expansion.

The regulatory review of the Northern Gateway Project also took a step forward in the second quarter with the release by the Joint Review Panel (JRP) of the Hearing Order setting out the schedule for the hearing process. "Northern Gateway will bring Canada's energy resources to the growing economies of the Pacific basin, while delivering sustainable local and regional prosperity to northern BC and Alberta and national economic benefits for all Canadians," said Mr. Daniel. "We're pleased with the scope of the public hearings, which clearly meets the widely expressed desire for a full and open review of the Project.

The JRP will test the merits of our proposal and hold Enbridge to the highest standards. We have confidence that it will render a decision that is, and will be seen to be, in the best interests of Canada."

In Gas Pipelines, Processing and Energy Services, Enbridge announced the acquisition by an affiliate of Aux Sable of the Stanley Condensate Recovery Plant and the Prairie Rose Pipeline, key assets located in the Bakken area. The Prairie Rose Pipeline connects the Stanley Gas Plant to the Alliance Pipeline, which delivers high energy content gas to Aux Sable's Channahon, Illinois Plant for processing. Enbridge's proportionate share of the $185 million acquisition reflected its 42.7% interest in Aux Sable.

"As we enter the latter half of 2011, Enbridge remains confident of sustained strong performance and steady growth across all of our business segments, enabling us to continue to deliver superior results to our shareholders," concluded Mr. Daniel.

SECOND 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/investor.


--  On July 1, 2011, Sable NGL LLC, an affiliate of Aux Sable, acquired the
    Stanley Condensate Recovery Plant and the Prairie Rose Pipeline for
    US$0.2 billion. The Stanley Plant removes condensate and will have a
    capacity of 80 million cubic feet per day (MMcf/d). The 12-inch
    diameter, 134-kilometre (83-mile) Prairie Rose Pipeline, with an
    estimated capacity of 110 MMcf/d connects the Stanley Plant to the
    Alliance Pipeline, which then delivers high energy content gas to Aux
    Sable's Channahan, Illinois plant for processing. Enbridge has a 42.7%
    equity interest in both Aux Sable and Sable NGL LLC and a 50% interest
    in Alliance Pipeline. 

--  Enbridge's investment of $144 million to acquire an additional interest
    in Noverco Inc. (Noverco) from Laurentides Investissements (SAS), a
    subsidiary of GDF SUEZ, announced on February 3, 2011, was completed on
    June 30, 2011. Trencap, a partnership controlled and managed by the
    Caisse de Depot et Placement du Quebec, acquired Laurentides
    Investissements' remaining 10.8% interest in Noverco; Enbridge and
    Trencap are now the sole shareholders of Noverco. Noverco is a holding
    company that owns 71% of the Gaz Metro Limited Partnership which owns
    gas distribution and gas pipeline assets in the province of Quebec and
    gas and electric power distribution and transmission assets in the State
    of Vermont. 

--  On June 24, 2011, the NEB approved the 10-year CTS agreement reached
    between Enbridge and shippers on its crude oil mainline system. The CTS
    took effect on 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 Enbridge Energy Partners, L.P. (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 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. With NEB approval of the CTS,
    shippers who initiated the Alberta Clipper hearing request with the NEB
    have formally withdrawn their complaints and the hearing proceedings
    were terminated on July 7, 2011. 

--  On May 11, 2011, shareholders approved a two-for-one stock split at the
    Company's Annual and Special Meeting of Shareholders. Effective May 25,
    2011, the number of outstanding shares doubled from approximately 387
    million to approximately 774 million. 

--  On May 9, 2011, Enbridge reported a crude oil release from a pipeline on
    its Norman Wells System approximately 50 kilometres south of the
    community of Wrigley, NWT. On May 20, 2011, Enbridge returned the Norman
    Wells line to service after completing the necessary repairs. Based on
    current estimates provided by the third party experts on site, Enbridge
    anticipates the release volume to be approximately 1,500 barrels. The
    Norman Wells pipeline is a 12-inch, 39,400 bpd line transporting sweet
    crude oil and stretches 869 kilometres (540 miles) from Norman Wells,
    NWT to Zama, AB. 

--  On May 4, 2011, Enbridge Income Fund Holdings Inc. (ENF) and Enbridge
    Income Fund (the Fund) announced receipt of a proposal from Enbridge
    pursuant to which Enbridge would transfer three renewable energy assets
    to the Fund. The proposal contemplates that the Ontario Wind, Sarnia
    Solar and Talbot Wind energy projects would be transferred for an
    aggregate price of $1.3 billion, to be paid in part by the issuance of
    additional ordinary trust units of the Fund (Units) to both ENF and
    Enbridge on a pro rata basis in accordance with their present holdings
    in the Fund. Under the proposal, Enbridge has agreed to provide bridge
    debt financing to the Fund for the balance of the price. Enbridge would
    also grant an option to ENF to acquire some or all of the Units for
    which Enbridge would be entitled to subscribe. The proposed transfer is
    subject to all necessary approvals, including approval by the Boards of
    ENF and the Fund and the minority shareholders of ENF, as well as
    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 the respective boards of the Fund
    and ENF. If approved and completed, the transfer would further reinforce
    Enbridge's financial capacity to undertake attractive investment
    opportunities under development. 

DIVIDEND DECLARATION

On August 4, 2011, the Enbridge Board of Directors declared quarterly dividends of $0.245 per common share on a post-split basis and $0.34375 per Series A Preferred Share. Both dividends are payable on September 1, 2011 to shareholders of record on August 15, 2011. On May 11, 2011, the Company's shareholders approved a stock split with a record date of May 25, 2011.

CONFERENCE CALL

Enbridge will hold a conference call on Friday, August 5, 2011 at 9:00 a.m. Eastern time (7:00 a.m. Mountain time) to discuss the second quarter 2011 results. Analysts, members of the media and other interested parties can access the call at +617-597-5344 or toll-free at 1-866-383-8119 using the access code of 64733884. 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 85834972) will be available until August 12, 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 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.

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.


HIGHLIGHTS                                                                  
                                 Three months ended        Six months ended 
                                            June 30,                June 30,
                              ----------------------------------------------
                                   2011        2010        2011        2010 
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(unaudited; millions of                                                     
 Canadian dollars, except per                                               
 share amounts)                                                             
Earnings Attributable to                                                    
 Common Shareholders                                                        
 Liquids Pipelines                  197         133         333         267 
 Gas Distribution                    41          20         144         100 
 Gas Pipelines, Processing                                                  
  and Energy Services                34          46          85          70 
 Sponsored Investments               63          57         122         109 
 Corporate                          (76)       (118)        (32)        (66)
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                                    259         138         652         480 
 Earnings per Common Share         0.35        0.19        0.87        0.65 
 Diluted Earnings per Common                                                
  Share                            0.34        0.18        0.86        0.64 
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Adjusted Earnings(1)                                                        
 Liquids Pipelines                  124         133         260         267 
 Gas Distribution                    39          30         131         118 
 Gas Pipelines, Processing                                                  
  and Energy Services                44          22          83          61 
 Sponsored Investments               55          51         112         102 
 Corporate                           (2)         (4)          8           2 
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                                    260         232         594         550 
 Adjusted Earnings per Common                                               
  Share                            0.35        0.31        0.79        0.75 
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Cash Flow Data                                                              
 Cash provided by operating                                                 
  activities                        575         511       1,532       1,157 
 Cash used in investing                                                     
  activities                       (622)       (558)     (1,087)     (1,187)
 Cash provided by/(used in)                                                 
  financing activities                -          23        (378)        107 
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Dividends                                                                   
 Common share dividends                                                     
  declared                          190         161         378         322 
 Dividends paid per common                                                  
  share                          0.2450      0.2125      0.4900      0.4250 
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Shares Outstanding (millions)                                               
 Weighted average common                                                    
  shares outstanding                750         739         748         737 
 Diluted weighted average                                                   
  common shares outstanding         760         747         758         745 
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Operating Data                                                              
Liquids Pipelines - Average                                                 
 Deliveries (thousands of                                                   
 barrels per day)                                                           
 Canadian Mainline(2)             2,070       2,210       2,193       2,132 
 Regional Oil Sands System(3)       285         293         307         265 
 Spearhead Pipeline                  57         161         108         137 
 Olympic Pipeline                   265         285         263         272 
Gas Distribution - Enbridge                                                 
 Gas Distribution                                                           
 Volumes (billions of cubic                                                 
  feet)                              75          63         268         232 
 Number of active customers                                                 
  (thousands)(4)                  1,971       1,936       1,971       1,936 
 Heating degree days(5)                                                     
  Actual                            485         346       2,451       2,072 
  Forecast based on normal                                                  
   weather                          495         490       2,297       2,253 
Gas Pipelines, Processing and                                               
 Energy Services - Average                                                  
 Throughput Volume (millions                                                
  of cubic feet per day)                                                    
  Alliance Pipeline US            1,519       1,582       1,601       1,631 
  Vector Pipeline                 1,395       1,353       1,572       1,435 
  Enbridge Offshore Pipelines     1,732       1,949       1,741       1,976 
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(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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