Mr. Al Monaco reports

ENBRIDGE REPORTS SECOND QUARTER ADJUSTED EARNINGS OF $328 MILLION OR $0.40 PER COMMON SHARE

Enbridge Inc. has released its second-quarter results.

"Earnings for the first half of this year are in line with our expectations and our full-year adjusted earnings per share guidance of $1.84 to $2.04 per share," said Al Monaco, president and chief executive officer. "More broadly, we are keenly focused on the implementation of our strategic plan and on our key priorities of safety and operational reliability, execution of our growth projects, and extending and diversifying our growth beyond 2017. The plan, which now includes a growth capital program of $42-billion, of which $37-billion is commercially secured and expected to be put into service by 2017, gives us continued confidence in delivering average annual earnings-per-share growth of 10 to 12 per cent through 2017, and there are a number of factors that bode very well for post 2017 growth.

"In liquids pipelines, our largest business, our strategy is driven by our customers' need for incremental pipeline capacity and new market access to accommodate the continued strong growth of North American supply," said Mr. Monaco. "Market access remains a strategic imperative, and we are making good progress. Construction of the Seaway twin is now mechanically complete, and we expect to complete the Flanagan South project this fall, adding an incremental 600,000 barrels per day of heavy crude capacity to the key refining hub in the U.S. Gulf Coast. By the end of 2016, we expect to bring into service projects that will open up approximately 1.7 million barrels per day of incremental capacity."

Enbridge remained active in the capital markets. Since the end of the first quarter, Enbridge has raised approximately $500-million through a public common share offering. Proceeds from the offering will be used to finance the incremental capital required for the line 3 replacement program and other general corporate purposes. In addition, the company raised approximately $900-million in cumulative redeemable preference shares, $1.5-billion (U.S.) in senior notes and $300-billion in medium-term notes.

Effective July 1, 2014, Enbridge and Enbridge Energy Partners LP restructured the equity in EEP under which Enbridge, as the general partner of EEP, will permanently waive its existing incentive distribution rights (IDR) in exchange for Class D units and new incentive distribution units (IDU). The GP share of incremental cash distributions will also decrease from 48 per cent of all distributions in excess of 49.50 U.S. cents per unit per quarter down to 23 per cent of all distributions in excess of the EEP's current quarterly distribution of 54.35 U.S. cents per unit per quarter. The restructuring is intended to enhance the economics of EEP's investment projects and growth opportunities, while at the same time re-establishing EEP as a strong sponsored vehicle and as an effective source of financing for Enbridge through future drop downs.

"This restructuring builds upon steps we initiated last year to re-establish EEP as a cost-effective sponsored vehicle for Enbridge," said Mr. Monaco. "A stronger EEP supports Enbridge's strategic priorities of executing our growth capital program and extending growth beyond 2017."

On July 1, 2014, EEP completed a drop down of additional interest in the natural gas and natural gas liquids mid-stream business to Midcoast Energy Partners LP for cash proceeds of $350-million (U.S.), the first drop down of additional interests since the initial public offering of MEP units. As a new low-cost financing vehicle, these drop downs to MEP improve EEP's financing effectiveness and are another step to re-establishing EEP as a strong sponsored vehicle for Enbridge.

On June 17, the Canadian federal government approved the Northern Gateway project. This approval comes after the most comprehensive review of a pipeline project in Canadian history and is subject to Northern Gateway meeting the 209 conditions issued by the joint review panel.

"The federal government's approval supports Enbridge's view that the project can be built and operated safely, and that opening up new markets for Canadian energy is in our national interest," said Mr. Monaco. "That said, we still have a lot of work to do. We will continue to focus on three priorities: meeting the JRP's conditions, working with the Province of British Columbia on its five conditions for supporting oil pipelines, and continuing to engage aboriginal communities to build further trust and support."

Effective July 28, 2014, the Enbridge board appointed as a director Marcel Coutu. Mr. Coutu is the past chairman of Syncrude Canada Ltd., an integrated oil sands project, and the former president and chief executive officer of Canadian Oil Sands Ltd. He is currently a director of Brookfield Asset Management, Power Corp. of Canada, Great-West Lifeco Inc. and IGM Financial Inc., as well as the Calgary exhibition and stampede board, a non-profit organization.

Also in the second quarter, Enbridge announced that Richard Bird, executive vice-president, chief financial officer and corporate development, will retire by the end of the 2014. Upon his retirement, Mr. Bird's role will be split into two roles: chief financial officer and chief development officer. In the interim, effective July 1, 2014, John Whelen has been appointed to the role of senior vice-president, finance, and Vern Yu has been appointed as senior vice-president, corporate development.

"Richard has been a force at Enbridge for more than 20 years and has made a significant contribution to the company's success. While he will unquestionably be missed, our leadership succession process ensures that we have highly qualified individuals who are ready to fill critical senior roles in the company," said Mr. Monaco. "Richard will be supporting John and Vern in their new roles for the remainder of the year, and we're confident that his disciplined approach will carry forward."

Results of operations

Enbridge second-quarter adjusted earnings increased by 5 per cent to 40 cents per common share and remained at $1.00 per common share for the first half of 2014 compared with the respective 2013 comparative periods. The results were in line with management's expectation, matching the prior year's exceptionally strong first half. The company remains on track to achieve its 2014 full-year adjusted-earnings-per-share guidance range.

Second-quarter adjusted earnings growth was primarily driven in liquids pipelines and bolstered by strong supply from Western Canada and increased downstream refinery demand leading to higher throughput on the Canadian mainline. Likewise, higher throughput was also achieved on the Athabasca mainline in the company's regional oil sands system, which also benefited from contributions from new projects coming into service, in particular the Norealis pipeline.

Another key driver to the company's second-quarter growth was contributions from the company's sponsored vehicles, as both EEP and Enbridge Income Fund delivered a second consecutive quarter of strong performance. EEP adjusted earnings growth was supported by higher throughput and tolls across the majority of its liquids pipeline assets. Earnings from the fund also reflected strong results from its liquids business, in particular the Saskatchewan system.

Enbridge Gas Distribution Inc. continued to contribute to Enbridge's reliable business model, although the second-quarter results were lower than the comparable period due to an increase in depreciation expense from an increased asset base and higher interest expense. EGD operated in the first half of 2014 under interim distribution rates pending approval of a five-year customized incentive rate application by the Ontario Energy Board. With the approval granted in July, 2014, the difference in revenues under the interim rates and rates under the customized IR application will be adjusted as part of EGD's October, 2014, quarterly rate adjustment mechanism process.

Energy Services' second-quarter adjusted earnings were unfavourable compared with the exceptionally strong second quarter of 2013 and reflected narrowing location spreads and less favourable conditions in certain markets accessed by committed transportation capacity, with associated unrecovered demand charges.

The adjusted earnings discussed above exclude the impact of unusual, non-recurring or non-operating factors, the most significant of which are changes in unrealized derivative fair value gains and losses from the company's long-term hedging program, gains on the disposal of non-core assets and investments, as well as certain costs and related insurance recoveries arising from crude oil releases.

Second-quarter 2014 overview

For more information on Enbridge's growth projects and operating results, please see the management's discussion and analysis, which is filed on SEDAR and EDGAR and also available on the company's website.

• Earnings attributable to common shareholders increased from $42-million in the second quarter of 2013 to $756-million in the second quarter of 2014. The company delivered strong quarter-over-quarter earnings growth; however, the magnitude of this growth and the comparability of the company's quarterly results are impacted by a number of unusual, non-recurring or non-operating factors, the most significant of which is changes in unrealized derivative fair value gains and losses. The company has a comprehensive long-term economic hedging program to mitigate interest rate, foreign exchange and commodity price exposures. The changes in unrealized mark-to-market accounting impacts from this program create volatility in short-term earnings, but the company believes over the long term it supports reliable cash flows and dividend growth. Other non-recurring factors impacting quarter-over-quarter comparability were remediation and long-term stabilization costs of approximately $40-million after tax and before insurance recoveries recorded in the second quarter of 2013 related to the line 37 crude oil release, which occurred in June, 2013.
• Enbridge's adjusted earnings increased from $306-million in the second quarter of 2013 to $328-million in the second quarter of 2014. Liquids pipelines adjusted earnings reflected higher contributions from the Canadian mainline and regional oil sands system. Canadian mainline adjusted earnings reflected higher throughput partially offset by the absence of revenues from line 9B. Within the regional oil sands system, higher adjusted earnings were primarily attributable to higher throughput on the Athabasca mainline and contributions from the Norealis pipeline. In gas distribution, EGD's lower adjusted earnings reflected a gas transportation cost adjustment related to the first half of 2013, which was recorded in the third quarter of 2013, and higher depreciation expense due to the growth in asset base and higher interest expense. Energy services' adjusted earnings declined in the second quarter of 2014 compared with an exceptionally strong comparative 2013 period due to narrowing location spreads and less favourable conditions in certain markets accessed by committed transportation capacity. Both the company's sponsored vehicles, EEP and the fund, contributed to the adjusted earnings increase and reflected strong results from their core assets. EEP adjusted earnings reflected higher contributions from the majority of its liquids business through higher throughput and tolls, as well as the positive contribution from new assets placed into service. Adjusted earnings for the fund also reflected higher earnings from its liquids business, in particular the Saskatchewan system.
• On July 17, 2014, the OEB approved EGD's five-year customized IR application, with modifications. The customized IR application establishes the methodology for establishing rates for the distribution of natural gas over a five-year period from 2014 through 2018 and will allow EGD to recover its capital investment amounts, as well as an opportunity to earn above the allowed return on equity. The OEB decision also allows for final 2014 rates to be implemented with the October, 2014, quarterly rate adjustment mechanism with an effective date of Jan. 1, 2014. EGD is currently operating under OEB approved interim distribution rates. The difference in revenues under the interim rates and rates under the customized IR will be adjusted as part of the October, 2014, quarterly rate adjustment mechanism process.
• On July 1, 2014, Enbridge and EEP completed the equity restructuring, which was agreed to on June, 18, 2014, under which Enbridge Energy Company Inc., a wholly owned subsidiary of Enbridge and the GP of EEP, irrevocably waived its then-existing IDR in excess of its 2-per-cent GP interest in exchange for 66.1 million Class D units and 1,000 IDU. The Class D units carry a distribution equal to the quarterly distribution on the Class A common units. The third-quarter 2014 distribution on the Class D units will be adjusted to provide Enbridge with an aggregate distribution in 2014 equal to the distribution on its IDR as if the equity restructuring had not occurred. The IDU will not be entitled to a distribution initially, but will in the future be entitled to 23 per cent of any amount in excess of EEP's current quarterly Class A common unit distribution of 54.35 U.S. cents per unit. In the event of any decrease in the Class A common unit distribution below 54.35 U.S. cents per unit in any quarter during the next five years, the distribution on the Class D units will be reduced to the amount that would have been received by Enbridge under the existing IDR as if the equity restructuring had not occurred.
• Also on July 1, 2014, Enbridge and Marathon Petroleum Corp. reached an agreement to admit MPC as a 35-per-cent equity interest partner in the Southern Access extension project. MPC will also make additional cash contributions in accordance with the Southern Access extension spend profile in proportion to its 35-per-cent interest. The Southern Access extension was announced as part of Enbridge's light oil market access program in December, 2012, and will involve the construction of a new 265-kilometre (165-mile) 24-inch-diameter crude oil pipeline from Flanagan, Ill., to Patoka, Ill., for an initial capacity of approximately 300,000 barrels per day, as well as additional tankage and two new pump stations. Subject to regulatory and other approvals, Southern Access extension is expected to be placed into service in mid-2015, and Enbridge's share of the project is expected to be approximately $600-million (U.S.).
• On June 18, 2014, Enbridge announced that Richard Bird, executive vice-president, chief financial officer and corporate development, plans to retire by the end of 2014. Upon Mr. Bird's retirement, his responsibilities will be split into two separate roles of chief financial officer and chief development officer. Enbridge also announced the appointment of John Whelen as senior vice-president, finance, and Vern Yu as senior vice-president, corporate development, effective July 1, 2014.
• Since the end of the first quarter of 2014, the company completed the following financing transactions:
  • On July 17, 2014, Enbridge completed an offering of 14 million cumulative redeemable preference shares, Series 13, for gross proceeds of $350-million.
  • On June 24, 2014, Enbridge completed an offering of 7.9 million common shares for gross proceeds of approximately $400-million and on July 8, 2014, issued a further 1.2 million common shares pursuant to the underwriters' overallotment option for gross process of approximately $60-million.
  • On June 4, 2014, Enbridge issued senior notes of $500-million (U.S.) with a three-year maturity, $500-million (U.S.) with a 10-year maturity and $500-million (U.S.) with a 30-year maturity.
  • On May 22, 2014, Enbridge completed an offering of 20 million cumulative redeemable preference shares, Series 11, for gross proceeds of $500-million.
  • On April 22, 2014, Enbridge issued medium-term notes of $300-million with a three-year maturity through its subsidiary EGD.

Dividend declaration

On July 29, 2014, the Enbridge board of directors declared the quarterly dividends shown in the table. All dividends are payable on Sept. 1, 2014, to shareholders of record on Aug. 15, 2014.

Common shares                                                       $0.35000
Preference shares, Series A                                         $0.34375
Preference shares, Series B                                         $0.25000
Preference shares, Series D                                         $0.25000
Preference shares, Series F                                         $0.25000
Preference shares, Series H                                         $0.25000
Preference shares, Series J                                  $0.25000 (U.S.)
Preference shares, Series L                                  $0.25000 (U.S.)
Preference shares, Series N                                         $0.25000
Preference shares, Series P                                         $0.25000
Preference shares, Series R                                         $0.25000
Preference shares, Series 1                                  $0.25000 (U.S.)
Preference shares, Series 3                                         $0.25000
Preference shares, Series 5                                  $0.27500 (U.S.)
Preference shares, Series 7                                         $0.27500
Preference shares, Series 9                                         $0.27500
Preference shares, Series 11 (1)                                    $0.30740

(1) This first dividend declared for the preference shares, Series 11,        
includes accrued dividends from May 22, 2014, the date the shares were   
issued. The regular quarterly dividend of 27.5 cents per share will take     
effect on Dec. 1, 2014.                                            

Conference call

Enbridge will hold a conference call on Friday, Aug. 1, 2014, at 9 a.m. Eastern Time (7 a.m. Mountain Time) to discuss the second-quarter 2014 results. Analysts, members of the media and other interested parties can access the call toll-free at 1-800-708-4540 from within North America and outside North America at 1-847-619-6397, using the access code of 37572724 followed by the pound sign. The call will be audio webcast live on-line. 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 will be available toll-free at 1-888-843-7419 within North America and outside North America at 1-630-652-3042 (access code 37572724 followed by the pound sign) until Aug. 8, 2014.

The conference call will begin with presentations by the company's president and chief executive officer and the chief financial officer, followed by a question-and-answer period for investment analysts. A question-and-answer period for members of the media will then immediately follow.

  
               
                                 HIGHLIGHTS
             (in millions of dollars, except per-share amounts)

                                  Three months ended        Six months ended
                                            June 30,                June 30,
                                    2014        2013        2014        2013
Earnings attributable to
common shareholders
Liquids pipelines                   $431        $(67)       $475         $80
Gas distribution                      19          27         155         134
Gas pipelines, processing
and energy services                  107         160         298         189
Sponsored investments                 87          72         171         114
Corporate                            112        (150)          1        (225)
Earnings attributable to
common shareholders from
continuing operations                756          42       1,100         292
Discontinued operations --
gas pipelines, processing
and energy services                    -           -          46           -
                                     756          42       1,146         292
Earnings per common share           0.92        0.05        1.39        0.37
Diluted earnings per
common share                        0.91        0.05        1.38        0.36
Adjusted earnings (1)
Liquids pipelines                    220         159         438         378
Gas distribution                      15          25         118         138
Gas pipelines, processing
and energy services                   27          73          86         132
Sponsored investments                 96          71         180         138
Corporate                            (30)        (22)         (2)          8
                                     328         306         820         794
Adjusted earnings per
common share (1)                    0.40        0.38        1.00        1.00
Cash flow data
Cash provided by operating
activities                           812         937       1,145       1,730
Cash (used) in investing
activities                        (2,886)     (1,949)     (5,629)     (3,592)
Cash provided by financing
activities                         2,490         731       4,955       1,151
Dividends
Common share dividends
declared                             293         259         584         513
Dividends paid per common
share                             0.3500      0.3150      0.7000      0.6300
Operating data
Liquids pipelines -- average
deliveries (thousands of
barrels per day)
Canadian mainline (2)              1,968       1,604       1,936       1,693
Regional oil sands
system (3)                           690         402         680         440
Spearhead pipeline                   196         184         190         175
Gas distribution -- Enbridge
Gas distribution (EGD)
Volumes (billions of cubic
feet)                                 76          74         288         255
Number of active customers
(thousands) (4)                    2,071       2,035       2,071       2,035
Heating degree days (5)
Actual                               493         491       2,699       2,289
Forecast based on normal
weather                              461         495       2,238       2,366
Gas pipelines, processing
and energy services --
Average throughput volume
(millions of cubic feet per
day)
Alliance pipeline U.S.             1,662       1,554       1,695       1,593
Vector pipeline                    1,326       1,408       1,553       1,563
Enbridge offshore
pipelines                          1,590       1,351       1,477       1,401

(1) Adjusted earnings represent earnings attributable to common shareholders
adjusted for unusual, non-recurring or non-operating factors. Adjusted
earnings and adjusted earnings per common share are non-GAAP (generally 
accepted accounting principles) measures that do not have any standardized 
meaning prescribed by GAAP.
(2) Canadian mainline includes deliveries ex Gretna, Man., which is made
up of United States and Eastern Canada deliveries originating from
Western 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 EGD
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
EGD'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 C. The figures given are those
accumulated in the Greater Toronto Area.

We seek Safe Harbor.