Mr. Sanjay Lad reports
ENBRIDGE ENERGY PARTNERS, L.P. REPORTS EARNINGS FOR FOURTH QUARTER 2016
Enbridge Inc.'s Enbridge Energy Partners LP had fourth quarter net income and cash provided by operating activities of $80.3-million and $454.6-million, respectively.
Enbridge Partners reports fourth quarter adjusted EBITDA (adjusted earnings before interest, taxes, depreciation and amortization) and distributable cash flow (DCF) of $468.8-million and $220.9-million, respectively (1).
Highlights
for 2016:
-
Full-year Lakehead pipeline system deliveries on average increased 11 per cent when compared with 2015;
- Reports full-year net loss and cash provided by operating activities of $162.4-million and $1,415.7-million, respectively;
- Reports full-year adjusted EBITDA and DCF of $1,881.1-million and $942.8-million, respectively
(1);
- Recently closed the acquisition of an effective 27.6-per-cent interest in the Bakken pipeline system; anticipated joint financing arrangement with sponsor expected to enhance the partnership's financing flexibility.
As the partnership and its sponsor, Enbridge, have previously announced, a strategic review of EEP is continuing with the objectives of improving EEP's financial position and future outlook. The review is expected to continue into the second quarter of 2017.
(1) A non-generally accepted accounting principle measure.
The partnership's key financial results for the three and 12 months ended Dec. 31, 2016, compared with the same period in 2015, were as set out in the attached table.
FINANCIAL HIGHLIGHTS
(in millions, except per-unit amounts)
Three months ended 12 months ended
Dec. 31, Dec. 31,
2016 2015 2016 2015
Net income (loss) (1) $80.3 $6.9 $(162.4) $132.0
Net income (loss) per unit (in dollars per unit) 0.08 (0.14) (1.08) (0.25)
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Adjusted EBITDA (2) 468.8 450.7 1,881.1 1,766.0
Adjusted net income (1) 103.7 96.9 442.4 497.6
Adjusted net income per unit (in dollars per unit) 0.14 0.11 0.62 0.80
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(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 and adjusted EBITDA for the three and 12 months ended Dec. 31, 2016, as reported above, eliminate the effect of: (a) non-cash, mark-to-market net gains and losses; (b) asset impairment; and other adjustments.
Net income for the fourth quarter of 2016 increased $73.4-million over the same period from the prior year predominantly due to an asset impairment of $62.5-million on the Berthold rail facility during the fourth quarter of 2015. There was no similar impairment during the current period. Adjusted net income of $103.7-million for the fourth quarter of 2016 was $6.8-million higher than the same period from the prior year. Higher earnings in the liquids segment were predominantly due to an increase in Lakehead system deliveries attributable to projects placed into service during 2016. Higher liquids segment earnings were partially offset by lower earnings in the natural gas segment due to lower natural gas and natural gas liquids system volumes.
During the fourth 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 amounts)
Three months ended 12 months ended
Dec. 31, Dec. 31,
2016 2015 2016 2015
Operating revenues $1,250.8 $1,136.7 $4,481.9 $5,146.1
Operating expenses
Commodity cost 548.0 400.5 1,659.1 2,372.9
Environmental costs, net of recoveries (6.1) 2.0 2.2 3.1
Operating and administrative 214.5 266.4 866.5 971.3
Power 70.6 67.1 277.4 259.5
Depreciation and amortization 146.5 141.4 580.9 536.2
Goodwill impairment - - - 246.7
Asset impairment - 62.5 767.7 74.8
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Operating income 277.3 196.8 328.1 681.6
Interest expense, net (118.8) (107.5) (445.5) (322.0)
Allowance for equity used during construction 9.8 16.3 45.5 70.3
Other income 8.6 8.6 31.5 29.3
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Income (loss) before income tax (expense) benefit 176.9 114.2 (40.4) 459.2
Income tax (expense) benefit 6.3 (1.7) (0.9) (4.9)
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Net income (loss) 183.2 112.5 (41.3) 454.3
Less: net income attributable to
Non-controlling interest 79.2 82.0 26.4 221.1
Series 1 preferred unit distributions 22.5 22.5 90.0 90.0
Accretion of discount on Series 1 preferred units 1.2 1.1 4.7 11.2
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Net income (loss) attributable to general and limited partner
ownership interests in Enbridge Energy Partners LP 80.3 6.9 (162.4) 132.0
Less: allocations to general partner 56.0 54.3 214.1 216.8
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Net income (loss) allocable to common units and i-units 24.3 (47.4) (376.5) (84.8)
Net income (loss) per common unit and i-unit (basic and diluted) 0.08 (0.14) (1.08) (0.25)
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Comparison of quarterly results
Following are explanations for significant changes in the partnership's financial results, comparing the three and 12 months ended Dec. 31, 2016, with the same period of 2015. The comparison refers to operating income and adjusted operating income. Adjusted operating income excludes the effect of certain non-cash and other items that the partnership believes are not indicative of core operating results.
Liquids
Fourth quarter operating results for the liquids segment increased $112.6-million to $311.7-million over the comparable period in 2015. Fourth quarter 2015 operating results included an asset impairment of $62.5-million of the Berthold rail facility and costs associated with the Line 2 hydrotest. No similar impairment or hydrotest expenses occurred in the current period. Current-period segment operating results also benefited from higher revenues attributable to higher Lakehead system deliveries as a result of new projects placed into service, and a decrease in operating and administrative expenses. Higher revenues were partially offset by increased depreciation expense over the same period from prior year due to new assets placed into service.
Fourth quarter adjusted operating income for the liquids segment increased $29.2-million to $311.9-million over the comparable period in 2015. Revenues from the liquids pipeline systems increased due to higher Lakehead system deliveries as a result of new projects placed into service and a decrease in operating and administrative expenses. Higher revenues were partially offset by increased depreciation expense over the same period from prior year due to new assets placed into service.
Natural gas
Fourth quarter operating results for the natural gas segment decreased $31.3-million over the comparable period in 2015, primarily attributable to increased non-cash unrealized mark-to-market losses in the current period compared with the same period of 2015. The decrease in segment operating results was also attributable to lower natural gas and NGL system volumes and was partially offset by reductions in operating and administrative expenses from enacted cost reduction measures.
Fourth quarter adjusted operating results for the natural gas segment decreased $8.7-million over the comparable period in 2015. The decrease in segment-adjusted operating results was predominantly attributable to lower natural gas and NGL system volumes. Lower system volumes were primarily attributable to the continued low-commodity-price environment, which has resulted in reductions in drilling activity from producers in the areas in which the partnership operates. The decrease in adjusted segment operating results was partially offset by reductions in operating and administrative expenses from enacted cost reduction measures.
We seek Safe Harbor.
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