Mr. Greg Ebel reports

ENBRIDGE REPORTS STRONG FIRST QUARTER 2023 FINANCIAL RESULTS AND REAFFIRMS FINANCIAL GUIDANCE AND OUTLOOK

Enbridge Inc. has released first quarter 2023 financial results, received $300-million of newly secured growth projects and reaffirmed its 2023 financial outlook.

Highlights (all financial figures are unaudited and in Canadian dollars unless otherwise noted):

• First quarter GAAP (generally accepted accounting principles) earnings of $1.7-billion or 86 cents per common share, compared with GAAP earnings of $1.9-billion or 95 cents per common share in 2022.
• Adjusted earnings of $1.7-billion or 85 cents per common share, compared with $1.7-billion or 84 cents per common share in 2022.
• Adjusted earnings before interest, income taxes and depreciation and amortization (EBITDA) of $4.5-billion, compared with $4.1-billion in 2022.
• Cash provided by operating activities of $3.9-billion, compared with $2.9-billion in 2022.
• Distributable cash flow (DCF) of $3.2-billion, compared with $3.1-billion in 2022.
• Reaffirmed 2023 full-year financial guidance for EBITDA and DCF and medium-term outlook.
• Reached an agreement in principle with shippers on the Mainline pipeline system reinforcing the Mainline as a common carrier system providing stable and competitive tolls.
• Sanctioned previously announced Enbridge Houston Oil Terminal (EHOT) for $229-million (U.S.) which is expected to add 2.7 million barrels of oil storage capacity which further strengthens the system's value.
• Launching the binding open season, discussed at Enbridge day, on the Flanagan South Pipeline (FSP), highlighting the value of Liquids Pipelines' existing downstream infrastructure and advancing the company's U.S. Gulf Coast strategy.
• Announced the signing of a letter of intent with Yara International to jointly construct a blue ammonia export production facility at Enbridge Ingleside Energy Centre (EIEC).
• Signed a definitive agreement to acquire a 93.8-per-cent interest in Aitken Creek gas storage facility and a 100-per-cent interest in Aitken Creek North gas storage facility (collectively, Aitken Creek) for $400-million, adding 77 billion cubic feet (Bcf) of gas storage capacity in British Columbia, Canada.
• Closed the previously announced $335-million (U.S.) acquisition of Tres Palacios on April 3.
• Concluded a successful open season on Texas Eastern Transmission LP in the Appalachia region with strong shipper interest.
• Enbridge and its partners, EDF Renewables and CPP Investments, awarded the right to develop the future Normandy offshore wind farm, with an expected installed capacity of one gigawatt.
• Issued $2.3-billion (U.S.) aggregate amount of sustainability-linked bonds (SLB) in the United States, further strengthening Enbridge's commitment to its emissions reduction goals.
• On track to achieve debt to EBITDA in the lower half of the target range by year-end, providing significant financial flexibility and demonstrating commitment to the company's equity self-financing model.

Chief executive officer comment

Greg Ebel, president and CEO, commented on the following:

"We are very pleased with a strong start to 2023 and how our low-risk business model continues to deliver in all market cycles. Our first quarter results were right in line with our expectations despite extreme volatility in both financial and commodity markets. Operationally, we continue to be a first-choice service provider to our customers, and during the quarter, this resulted in high utilization across our systems and record volumes on the Mainline. Enbridge is very proud of its long history of predictable financial and operational performance. For 17 consecutive years, shareholders have benefited from our ability to consistently meet financial guidance and we have delivered 28 consecutive annual dividend increases.

"The agreement in principle on a negotiated settlement on the Mainline is a win-win-win for us, our customers and the markets we serve. The new settlement builds on 27 years of incentive tolling arrangements and keeps us aligned with our customers to maximize throughput and maintain first-choice service standards, while continuing to grow the system as needed. Under the agreement in principle, it is expected that Enbridge will earn attractive risk-adjusted within a return on equity (ROE) performance collar which provides downside protection in the event of supply or demand disruptions or unforeseen cost exposure, a feature that did not exist in the previous competitive tolling settlement. The new toll also provides inflationary adjustments based on the U.S. consumer price index and power indices.

"We continue to grow both our conventional and lower-carbon businesses. We are pleased to have started the year by adding to our secured growth backlog, which sits at $17-billion and securing a number of high-quality acquisitions at attractive multiples.

"On the conventional side, we executed a strategic tuck-in acquisition of the Aitken Creek natural gas storage facility, expanding our LNG-related footprint in B.C. We also received strong customer interest from our open season to support transporting much-needed natural gas out of the Appalachia region. On the Gulf Coast, we sanctioned the Enbridge Houston Oil Terminal which will strengthen our full-path service offering and furthers our world-class export platform.

"On the lower-carbon front, we enhanced our renewable power portfolio with the announcement of the successful award to design and construct the Normandy offshore wind farm and announced a joint venture with Yara International to construct a blue ammonia project on the U.S. Gulf Coast.

"The joint venture with Yara to construct a uniquely positioned blue ammonia project demonstrates how our existing conventional asset base is leading to significant lower-carbon infrastructure opportunities. The project will be ideally situated next to our Texas Eastern pipeline system, providing access to low-cost natural gas feedstock and the deepwater docks at the Enbridge Ingleside Energy Center (EIEC) which provide export access to global markets. Our joint venture with OXY to develop a nearby CO2 sequestration hub will be used to sequester the project's captured CO2 and the U.S. tax incentives provided by the Inflation Reduction Act are expected to enhance project economics. This project further positions EIEC to become one of the most sustainable terminals in North America producing globally competitive and decarbonized ammonia.

"Our debt to EBITDA remains in the bottom half of our range at 4.6 times this quarter, providing us the financial flexibility to continue adding to our organic growth backlog and to execute selective tuck-in M&A. We opportunistically repurchased a small amount of shares in April, demonstrating our commitment to increasing capital returns for shareholders. This focus on financial discipline and maintaining a strong balance sheet ensures excess investment capacity is available to continue delivering growth and creating value for our shareholders."

Financial results summary

Financial results for the three months ended March 31, 2023, and 2022 are summarized in the attached table.

GAAP earnings attributable to common shareholders for the first quarter of 2023 decreased by $194-million or nine cents per share compared with the same period in 2022, primarily due to a realized loss of $638-million ($479-million after tax) due to termination of foreign exchange hedges. This was partially offset by operating performance factors discussed in detail below and a non-cash, unrealized derivative fair value gain of $532-million ($399-million after tax) in 2023, compared with a gain of $433-million ($331-million after tax) in 2022, reflecting changes in the mark-to-market value of derivative financial instruments used to manage foreign exchange risks.

Adjusted EBITDA in the first quarter of 2023 increased by $321-million compared with the same period in 2022. This was primarily driven by contributions from increased economic interests in the Gray Oak Pipeline and the Cactus II Pipeline during the second half of 2022 and early 2023, higher ex Gretna volumes on the Mainline, recognition of revenues attributable to the Texas Eastern rate case settlement, and the favourable effect of translating U.S.-dollar EBITDA at a higher average exchange rate in 2023 compared with the same period of 2022. These factors were partially offset by a decrease in earnings from Enbridge's reduced interest in DCP Midstream LLC and lower commodity prices impacting DCP and Aux Sable.

Adjusted earnings in the first quarter of 2023 increased by $21-million, or one cent per share, primarily due to higher adjusted EBITDA contributions discussed above, offset by higher financing costs primarily due to higher interest rates and higher depreciation expense from assets placed into service in last year.

DCF for the first quarter of 2023 increased by $108-million, primarily due to higher adjusted EBITDA contributions, partially offset by the timing of maintenance capital spend, higher cash taxes on higher taxable earnings and higher financing costs noted above.

Financial outlook

The company reaffirms its 2023 financial guidance for EBITDA and DCF. Results for the first three months of 2023 are in line with the company's expectations and the company anticipates that its businesses will continue to experience strong capacity utilization and operating performance through the balance of the year with normal course seasonality. Forward financial guidance continues to reflect projections within the settlement in principle on the Mainline.

Strong operational performance is expected to be offset by higher financing costs, due to increased interest rates on unhedged floating rate debt.

Financing update

In March of 2023, Enbridge issued a two-tranche U.S. debt offering consisting of $700 million (U.S.) of three-year callable notes and $2.3-billion (U.S.) of 10-year sustainability-linked bonds (SLB) for an aggregate principal amount of $3-billion (U.S.). The SLB incorporates Enbridge's 35-per-cent emissions intensity reduction target by 2030 and represents the largest single SLB offering globally, demonstrating Enbridge's continuing commitment to achieving its ESG (environmental, social, governance) targets. These debt offerings were substantially hedged at favourable rates.

In April of 2023, the company redeemed the $600-million (U.S.) 6.375 per cent fixed-to-floating rate subordinated notes, Series 2018-B.

The company is rated BBB+, or equivalent, by all four of its credit rating agencies, with stable outlooks, reflecting Enbridge's financial strength and low-risk commercial model. Enbridge anticipates exiting 2023 with its debt to EBITDA metric again within the lower half of the target range while continuing to finance its secured capital growth program within its equity self-financing model.

Secured growth project execution update

The company added approximately $300-million of capital to its secured capital program, including the construction of the Enbridge Houston Oil Terminal, a storage facility that is expected to have 2.7 million barrels of oil storage capacity. The facility is planned to include connectivity to the Seaway Jones Creek terminal with expansion optionality.

The company's current secured growth program is now approximately $17-billion with the company expecting to place $3.5-billion into service in 2023 inclusive of the Gas Transmission's Modernization and Gas Distribution's Utility Growth Capital programs. The secured growth program is supported by commercial models consistent with Enbridge's low-risk model.

Business updates

Mainline tolling agreement in principle with shippers on Mainline pipeline system

Enbridge has reached an agreement in principle on a negotiated settlement with shippers for tolls on its Mainline pipeline system. The settlement covers both the Canadian and U.S. portions of the Mainline and would see the Mainline continuing to operate as a common carrier system available to all shippers on a monthly nomination basis. The settlement is subject to regulatory and other approvals and the term is 7.5 years through the end of 2028, with new interim tolls to take effect on July 1, 2023.

The settlement will include:

• An international joint toll (IJT), for heavy crude oil movements from Hardisty to Chicago, comprising a Canadian Mainline toll of $1.65 per barrel plus a Lakehead system toll of $2.57 (U.S.) per barrel, plus the applicable Line 3 replacement surcharge;
• Toll escalation for operation, administration and power costs tied to U.S. consumer price and power indices;
• Tolls will continue to be distance and commodity adjusted, and will utilize a dual currency IJT; and a financial performance collar providing incentives for Enbridge to optimize throughput and cost, but also providing downside protection in the event of extreme supply or demand disruptions or unforeseen operating cost exposure. This performance collar is intended to ensure the Mainline will earn 11-per-cent to 14.5-per-cent returns, on a deemed 50-per-cent equity capitalization, which is similar to the returns earned on average during the previous tolling agreement.

Approximately 70 per cent of Mainline deliveries are tolled under this settlement, while approximately 30 per cent of deliveries are tolled on a full-path basis to markets downstream of the Mainline. The other continuing feature is that the Mainline toll will flex up or down 3.5 U.S. cents per barrel for 50,000-barrel-per-day changes in throughput.

The expected financial outcome from this settlement is in line with previously reported financial results after taking into consideration the previously recognized provision, inflationary cost adjustments and increased volumes.

As part of the settlement, Enbridge will be settling its previously filed Lakehead cost of service application, currently before the U.S. Federal Energy Regulatory Commission (FERC).

Expanding U.S. Gulf Coast service with previously announced Enbridge Houston Oil Terminal

The company has reached a final investment decision on the Enbridge Houston Oil Terminal project which consists of four 680,000 bbl (barrel) tanks with a total capacity of 2.7 million barrels and provides U.S. Gulf Coast storage to Enbridge Mainline customers. EHOT is planned to include connectivity to the Seaway Jones Creek terminal with expansion optionality to include Sea Port Oil Terminal (SPOT) export deliveries and receipts from Gray Oak pipelines in Texas. Future phases could add up to 21 additional tanks, bringing the total terminal capacity up to approximately 15 million barrels. EHOT is expected to begin operations in 2025.

Enbridge launching Flanagan South open season

Enbridge plans to launch a binding open season to leverage available capacity on FSP to secure up to 95,000 bpd (barrels per day) of commitments. In addition to increasing secured throughput on FSP, the volumes would also secure long-haul demand on the entire Enbridge network, upstream and downstream of FSP.

Enbridge and Yara International partnering to construct blue ammonia production facility

On March 31, Enbridge signed a letter of intent to jointly develop a world-scale, low-carbon blue ammonia production facility with Yara International. The facility is expected to have production capacity of 1.2 million to 1.4 million tonnes per annum and approximately 95 per cent of the carbon dioxide generated from production is anticipated to be captured and transported to nearby permanent geological storage.

Based on early engineering and design, the investment is expected to be in the range of $2.6-billion (U.S.) to $2.9-billion (U.S.) with production starting in 2027/2028. Enbridge and Yara will be equal partners in the project and Yara is expected to contract full offtake from the facility, which further enhances the strategic value and commercial viability of the project for Enbridge.

The construction of any facilities will be subject to receipt of all necessary regulatory approvals.

Enbridge acquires Aitken Creek gas storage enhancing integrated value chain

Enbridge announced on May 1, 2023, that the company has entered into a definitive agreement with FortisBC to acquire a 93.8-per-cent interest in Aitken Creek for $400-million, plus payment for derivative contracts and gas inventory, subject to other customary closing adjustments.

Aitken Creek is strategically located in British Columbia and is connected to B.C. Pipeline, Alliance Pipeline and North Montney Mainline Pipeline, and will be connected to LNG Canada via Coastal GasLink. Aitken Creek currently has working gas capacity of approximately 77 Bcf.

The transaction is expected to close later in 2023, subject to receipt of customary regulatory approvals and closing conditions.

Texas Eastern open season

In April, the company concluded a successful open season on Texas Eastern in the Appalachia region. The company is pleased with shipper interest and is currently evaluating the results.

Tres Palacios closing

On April 3, 2023, Enbridge acquired Tres Palacios Holdings LLC for $335-million (U.S.) of cash, subject to customary closing adjustments. Tres Palacios is a natural gas storage facility located in the U.S. Gulf Coast and its infrastructure serves Texas gas-fired power generation and liquefied natural gas exports, as well as Mexico pipeline exports. Tres Palacios comprises three natural gas storage salt caverns with a total FERC-certificated working gas capacity of approximately 35 Bcf and an integrated 62-mile natural gas header pipeline system, with 11 inter- and intrastate natural gas pipeline connections.

Normandy offshore wind farm

Following the fourth offshore wind tender launched in January, 2021, the French Ministry of Energy Transition chose Eoliennes en Mer Manche Normandie SAS, the project company owned by the EDF Renewables and Maple Power consortium (a joint venture of Enbridge and CPP Investments), to design, build, operate and decommission the Normandy offshore wind project.

The planned Normandy offshore wind farm will be located more than 32 kilometres off the north coast and is expected to be commissioned around 2030. Over the next few years, planning and permitting will be finalized, which will require minimal development expenditure leading to construction later this decade. The fixed-bottom project is expected to supply the equivalent of the annual consumption of approximately 1.5 million people, more than half of the electricity needs of the population of Normandy.

Normal course issuer bid (NCIB) execution

In April, 2023, Enbridge repurchased and cancelled approximately 500,000 of its common shares, equating to approximately $25-million as part of its 2023 NCIB program.

Enbridge's NCIB program commenced on Jan. 6, 2023, and expires on the earlier of Jan. 5, 2024, or when the company reaches the approved share repurchase limit of 27,938,163 common shares to an aggregate amount of up to $1.5-billion.

Enbridge will continue to evaluate opportunities to repurchase shares pursuant to the company's NCIB program predicated upon maintaining a strong balance sheet, strong business performance, and evaluated against the availability and attractiveness of alternative capital investment opportunities.

Conference call

Enbridge will host a conference call and webcast on May 5, 2023, at 9 a.m. Eastern Time (7 a.m. Mountain Time) to provide a business update and review 2023 first quarter results. Analysts, members of the media and other interested parties can access the call toll free at 1-800-606-3040. The call will be audio webcast live. It is recommended that participants dial in or join the audio webcast 15 minutes prior to the scheduled start time. A webcast replay will be available soon after the conclusion of the event and a transcript will be posted to the website. The replay will be available for seven days after the call toll-free 1-800-606-3040 (conference ID: 9581867).

The conference call format will include prepared remarks from the executive team followed by a question-and-answer session for the analyst and investor community only. Enbridge's media and investor relations teams will be available after the call for any additional questions.

Dividend declaration

On May 2, 2023, the company's board of directors declared the quarterly dividends noted herein. All dividends are payable on June 1, 2023, to shareholders of record on May 15, 2023.

About Enbridge Inc.

Enbridge safely connects millions of people to the energy they rely on every day, fuelling quality of life through its North American natural gas, oil or renewable power networks and its growing European offshore wind portfolio. Enbridge is investing in modern energy delivery infrastructure to sustain access to secure, affordable energy and building on two decades of experience in renewable energy to advance new technologies, including wind and solar power, hydrogen, renewable natural gas, and carbon capture and storage. The company is committed to reducing the carbon footprint of the energy it delivers, and to achieving net-zero greenhouse gas emissions by 2050. Headquartered in Calgary, Alta., Enbridge's common shares trade under the symbol ENB on the Toronto and New York stock exchanges.

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