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Enter Symbol
or Name
USA
CA



Enbridge Inc
Symbol ENB
Shares Issued 924,352,708
Close 2016-04-29 C$ 52.12
Market Cap C$ 48,177,263,141
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Enbridge Energy earns $172.4-million in Q1 2016

2016-05-02 06:27 ET - News Release

Mr. Mark Maki reports

ENBRIDGE ENERGY PARTNERS, L.P. REPORTS EARNINGS FOR FIRST QUARTER 2016

Enbridge Inc.'s Enbridge Energy Partners LP had adjusted earnings before interest, taxes, depreciation and amortization and distributable cash flow for the three months ended March 31, 2016, of $466.2-million and $244.5-million, respectively.

First quarter highlights:

  • Record liquids pipeline systems deliveries of 3.3 million barrels per day in the first quarter, 15 per cent higher than the first quarter 2015;
  • Reported first quarter adjusted EBITDA and DCF of $466.2-million and $244.5-million, respectively.

As previously announced, the board of directors of the delegate of the partnership's general partner declared a quarterly cash distribution of 58.3 cents per unit, or $2.332 per unit on an annualized basis, on all of the partnership's outstanding units for the quarter ended March 31, 2016. The approved distribution remains unchanged from the previous quarter and represents an increase of 2.3 per cent over the first quarter of 2015. The distribution is payable on May 13, 2016, to unitholders of record at the close of business on May 6, 2016.

"The partnership's financial results for the first quarter are in line with our expectations and supported by the record deliveries on our liquids pipeline systems, which averaged 3.3 million barrels per day in the first quarter. The increase in system deliveries over the fourth quarter of 2015 is due to new market access that entered service on the Enbridge system during the fourth quarter, specifically the reversal and expansion of line 9B to Eastern Canada and the southern access extension into the Patoka, Ill., market. With our liquids pipeline systems' premier connectivity to North American refining centres, our competitive transportation rates and our expanded market access, we expect demand for our liquids pipeline systems to remain strong," said Mark Maki, president for the partnership.

"Western Canada and the Bakken region both have inadequate pipeline takeaway capacity and our pipeline systems provide our customers with reliable economic access to premium markets. This provides us with a high level of confidence in the continued high system utilization in our core liquids pipelines business.

"Our liquids pipelines system cash flows are underpinned by long-term, low-risk contract structures such as cost of service and take or pay, which largely mitigate the sensitivity to volume and commodity prices to our business's cash available for distribution. Furthermore, more than 90 per cent of our revenues are derived from investment grade counterparties. Our growth capital expenditures in both our liquids and natural gas businesses are forecast to be significantly lower in 2016 than recent years. Strategically, the partnership has initiated a process to evaluate a range of alternatives for our natural gas business unit and we will update investors on this process when we have concluded the evaluation."

Natural gas business strategic alternatives evaluation

In light of the low-commodity-price environment and the continuing challenges it presents to the company, EEP will continue to evaluate opportunities to strengthen its business. As part of this evaluation, EEP is exploring strategic alternatives for its investments in each of Midcoast Operating LP and Midcoast Energy Partners LP (MEP). EEP has begun working with MEP to explore and evaluate a broad range of strategic alternatives to address the challenges within the natural gas business. These various strategic alternatives may include, but are not necessarily limited to: asset sales; mergers, joint ventures, reorganizations or recapitalizations, and further reductions in operating and capital expenditures for the natural gas business. The evaluation process is in the early stages and is continuing, and no decision on any particular alternative has been reached. In addition, EEP cannot assure that any particular alternative will be pursued or effected. Neither EEP nor MEP intend to disclose further developments with respect to this evaluation process except to the extent that a specific course of action is approved, the process is concluded, or it is required by law or otherwise deemed appropriate.

The partnership's key financial results for the three months ended March 31, 2016, compared with the same period in 2015, were as shown in the table.

                              FINANCIAL HIGHLIGHTS
                         (In millions, except per unit)

                                                 Three months ended March 31,
                                                            2016        2015

Net income(1)                                        $      80.0 $     140.1
Net income per unit                                         0.07        0.26
                                                     ----------- -----------
Adjusted EBITDA(2)                                         466.2       432.2
Adjusted net income(1)                                     113.8       142.8
Adjusted net income per unit                                0.17        0.26

(1) Net income and adjusted net income attributable to general and limited
partner ownership interests in Enbridge Partners.
(2) Includes non-controlling interest.

Adjusted net income for the three months ended March 31, 2016, as reported in the table, eliminates the effect of: (a) non-cash, mark-to-market net gains and losses; (b) environmental costs, net of insurance recoveries, associated with the line 6B incident; (c) line 2 hydrotest expenses, net of recoveries, and other adjustments.

Adjusted net income of $113.8-million for the first quarter of 2016 was $29.0-million lower than the same period from the prior year. Higher operating income in the liquids pipeline business attributable to growth projects placed into service were more than offset by higher interest expense.

During the first quarter, the partnership attributed approximately $22.5-million of earnings to its outstanding Series 1 preferred units. This amount is deducted from net income to arrive at the amount of net income attributable to the general and limited partners. Preferred distributions are accrued at an annual rate of 7.5 per cent.

                         COMPARATIVE EARNINGS STATEMENT
                         (In millions, except per unit)

                                                 Three months ended March 31,
                                                            2016        2015

Operating revenue                                     $  1,061.6  $  1,428.6
Operating expenses
Commodity cost                                             348.0       779.1
Environmental costs, net of recoveries                      16.9         0.8
Operating and administrative                               215.0       217.1
Power                                                       72.8        63.6
Depreciation and amortization                              140.9       128.4
                                                      ----------  ----------
Operating income                                           268.0       239.6
Interest expense, net                                     (112.9)      (48.3)
Allowance for equity used during construction               12.3        23.0
Other income                                                 7.5         5.9
                                                      ----------  ----------
Income before income tax expense                           174.9       220.2
Income tax expense                                          (2.5)       (2.4)
                                                      ----------  ----------
Net income                                                 172.4       217.8
Less net income attributable to
Non-controlling interest                                    68.8        51.3
Series 1 preferred unit distributions                       22.5        22.5
Accretion of discount on Series 1 preferred units            1.1         3.9
                                                      ----------  ----------
Net income attributable to general and limited
partner ownership interests in Enbridge Energy
Partners                                              $     80.0  $    140.1
Less allocations to general partner                         55.9        54.2
                                                      ----------  ----------
Net income allocable to common units and i-units      $     24.1  $     85.9
                                                      ----------  ----------
Net income per common unit and i-unit (basic and
diluted)                                              $     0.07  $     0.26
                                                      ----------  ----------

Comparison of quarterly results

Following are explanations for significant changes in the partnership's financial results, comparing the three months ended March 31, 2016, with the same period of 2015. The comparison refers to adjusted operating income, which excludes the effect of non-cash and other items that are not indicative of core operating results.

                            ADJUSTED OPERATING INCOME 
                                   (In millions)

                                                Three months ended March 31,
                                                           2016        2015

Liquids                                              $    310.5  $    272.4
Natural gas                                                (1.6)        7.1
Corporate                                                  (3.5)       (4.0)
                                                     ----------  ----------
Adjusted operating income                            $    305.4  $    275.5
                                                     ----------  ----------

Liquids

First quarter adjusted operating income for the liquids segment increased $38.1-million to $310.5-million over the comparable period in 2015. Revenues from liquids pipeline systems increased due to higher transportation rates attributable to new assets placed into service related to the Mainline expansion project. In addition, revenues increased due to higher system deliveries. Higher segment revenues were partially offset by increased power and operating expenses. Depreciation expense increased approximately $11.3-million over the same period from prior year due to new assets placed into service.

                            LIQUIDS SYSTEMS VOLUMES                     
                                  (In millions)

                                                 Three months ended March 31,
                                                            2016        2015

Lakehead                                             $     2,735 $     2,330
Mid-continent                                                168         199
North Dakota                                                 402         342
                                                     ----------- -----------
Total                                                      3,305       2,871
                                                     ----------- -----------

Natural gas

First quarter adjusted operating income for the natural gas segment decreased $8.7-million to negative $1.6-million over the comparable period in 2015. The decrease in adjusted operating income was predominantly attributable to lower natural gas and natural gas liquids system production volumes, in addition to lower commodity prices, net of hedges. Lower system volumes were primarily attributable to the continued low-commodity-price environment for hydrocarbons, which has resulted in reductions in drilling activity from producers in the areas the the company operates. The decrease in segment operating income was partially offset by reductions in operating and administrative expenses from enacted cost-reduction measures.

 
                             NATURAL GAS THROUGHPUT    
                                 (MMBtu per day)

                                                 Three months ended March 31,
                                                            2016        2015

East Texas                                               948,000   1,007,000
Anadarko                                                 652,000     831,000
North Texas                                              216,000     287,000
                                                     ----------- -----------
Total                                                  1,816,000   2,125,000
                                                     ----------- -----------

                                 NGL PRODUCTION 
                                (Barrels per day)

                                                 Three months ended March 31,
                                                            2016        2015

Total system production                                   73,499      81,046

Management review of quarterly results

Enbridge Partners will host a conference call at 10 a.m. ET on Monday, May 2, 2016, to review its first quarter 2016 financial results. The call will be webcast live over the Internet and may be accessed on Enbridge Partners' website under events and presentations.

Presentation slides and condensed financial statements will also be available on the partnership's website.

Replay information

A webcast replay will be available at the company's website approximately two hours after the conclusion of the event. A transcript will be posted to the website within approximately 24 hours.

We seek Safe Harbor.

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