Mr. Guy Jarvis reports

ENBRIDGE ENERGY PARTNERS, L.P. AND ENBRIDGE INC. ANNOUNCE AGREEMENT TO ACQUIRE EQUITY INTEREST IN THE BAKKEN PIPELINE SYSTEM ESTABLISHING NEW PATH TO THE U.S. GULF COAST

Enbridge Inc.'s Enbridge Energy Partners LP and Marathon Petroleum Corp. have formed a new joint venture, which in turn has entered into an agreement to acquire a 49-per-cent equity interest in the holding company that owns 75 per cent of the Bakken pipeline system from an affiliate of Energy Transfer Partners LP and Sunoco Logistics Partners LP. Under this arrangement, EEP and Marathon Petroleum would indirectly hold 75 per cent and 25 per cent, respectively, of the joint venture's 49-per-cent interest in the holding company of the Bakken pipeline. The purchase price of EEP's effective 27.6-per-cent interest in the system is $1.5-billion (U.S.). Closing of the transaction is subject to certain conditions and is expected to occur in the third quarter of 2016.

The system consists of the Dakota access pipeline (DAPL) and the energy transfer crude oil pipeline (ETCO) projects. Phillips 66 owns the other 25 per cent of each pipeline project. Both the DAPL and ETCO projects are highly contracted and secured by long-term take-or-pay contracts with creditworthy counterparties.

"This acquisition is an attractive opportunity to participate in a pipeline system that will transport crude oil from the prolific Bakken formation in North Dakota to markets in eastern PADD II and the U.S. Gulf Coast (USGC), providing another important link in our market access strategy that is driven by improving netbacks and access to the best markets for our customers. The pipelines offer competitive tolls, a significant level of long-term take-or-pay commitments from high-credit quality customers, and strong risk-adjusted returns. Potential also exists for expansion of the pipelines should customer demand warrant. The investment is expected to be immediately accretive to distributable cash flow when the pipeline projects come into service, which we expect will occur by the end of 2016," said Mark Maki, president for EEP.

Guy Jarvis, executive vice-president, liquids pipelines and major projects, of Enbridge, noted: "The Bakken pipeline system is a great example of how the right acquisition can support and bolster our liquids pipelines strategy, while also supporting our U.S. sponsored vehicle -- EEP. In addition to the obvious project benefits, Enbridge also looks forward to working with Bakken pipeline to develop joint toll solutions that would provide an attractive opportunity to, once again, cost-effectively extend the reach of Enbridge's existing liquids pipelines system. Joint tolls will provide improved market access for customers, including a new path to the USGC via our mainline system through our recently completed southern access extension into the Patoka hub, where it will be available for connection to ETCO. This will provide our shippers the ultimate potential to reach the eastern USGC, which has been a strategic priority for us."

DAPL is a new 30-inch-diameter pipeline from the Bakken/Three Forks production area in North Dakota to market centres in Patoka, Ill. DAPL is expected to initially deliver in excess of 470,000 barrels per day of crude oil and has the potential to be expanded to 570,000 bpd. The pipeline has six origin locations in North Dakota and delivers to Patoka. The construction of terminals began in January, 2016, mainline pipeline construction began in May, 2016, and all major materials and equipment have been procured.

ETCO, formerly one of the trunkline pipelines, is a converted natural gas pipeline from Patoka to the Sunoco terminal in Nederland, Tex. The pipeline consists of 62 miles of a new 30-inch-diameter pipe, 686 miles of a converted 30-inch diameter pipe and 40 miles of a converted 24-inch-diameter pipe. Construction of the new pipe began in April, 2016. Both the pipe conversion and the pump stations are over 90 per cent complete. Both DAPL and ETCO are expected to be ready for service by the end of 2016.

EEP intends to enter into a bridge financing arrangement with Enbridge (U.S.) Inc., a wholly owned subsidiary of the company, to finance EEP's $1.5-billion (U.S.) investment at closing. The company is also taking steps to ensure that EEP has sufficient capital to permanently finance the investment in the system. To that end, it has proposed a longer-term joint financing arrangement to EEP through which both the company and EEP would finance the investment and participate in the returns generated by the system. As part of this arrangement, the company has also indicated a willingness to provide financing to EEP to support EEP's continuing investment. The terms of this arrangement are subject to the review of a committee of independent directors of the board of directors of the delegate of EEP's general partner, which will consider this arrangement in addition to other potential sources of long-term financing. While the terms of any joint financing arrangement with respect to the system are still in development, in prior joint financing arrangements, EEP has retained 25- to 33-per-cent interests in large greenfield development projects being undertaken by the Enbridge group with options to acquire additional interests. The company believes that under a variety of possible longer-term financing scenarios, the acquisition of the system will generate attractive returns and near-term cash flow accretion for both EEP and the company. The company plans to initially finance its investment in EEP from available liquidity, which has been bolstered through the issuance of more than $3.0-billion (Canadian) of equity and $1.2-billion (Canadian) of debt securities across the Enbridge group of companies thus far in 2016.

Upon successful closing of the transaction, EEP and Marathon Petroleum plan to terminate their transportation services and joint venture agreements for the Sandpiper pipeline project. EEP continues to believe the Bakken region is a highly productive and attractive basin, which has significant crude oil supply growth potential that will require additional pipeline capacity in the future. The scope and timing of the Sandpiper pipeline project will be evaluated during the quarter to ensure that the pipeline is positioned to meet the growing need for pipeline capacity while offering customers competitive tolls and strong netbacks. Additionally, in conjunction with a termination of the Sandpiper joint venture agreements with Marathon Petroleum, EEP will retain 100-per-cent ownership in its legacy North Dakota system, which is one of the most competitive outlets available to producers in the state.

We seek Safe Harbor.