Ms. Rebecca Morley reports

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

Enbridge Inc. has released third quarter 2023 financial results, reaffirmed its 2023 financial outlook and provided a quarterly business update.

Highlights:

• Third quarter GAAP (generally accepted accounting principles) earnings of $500-million or 26 cents per common share, compared with GAAP earnings of $1.3-billion or 63 cents per common share in 2022;
• Adjusted earnings of $1.3-billion or 62 cents per common share, compared with $1.4-billion or 67 cents per common share in 2022 adjusted earnings before interest, income taxes and depreciation and amortization (EBITDA) of $3.9-billion, an increase of 3 per cent, compared with $3.8-billion in 2022;
• Cash provided by operating activities of $3.1-billion, compared with $2.1-billion in 2022;
• Distributable cash flow (DCF) of $2.6-billion, an increase of $100-million, compared with $2.5-billion in 2022;
• Reaffirmed 2023 full-year financial guidance for EBITDA and DCF inclusive of the recent share offering dilution;
• Enbridge entered into definitive agreements with Dominion Energy Inc. to acquire The East Ohio Gas Company, Questar Gas Company and its related Wexpro companies, and Public Service Company of North Carolina Inc. for an aggregate purchase price of $14-billion (U.S.) ($19-billion);
• Enbridge has filed applications for all key federal and state required regulatory approvals to complete the pending acquisitions and approximately 75 per cent of the financing for the aggregate purchase price has been secured;
• Signed an agreement to increase ownership in Hohe See offshore wind farm and Albatros offshore wind farm by a further 24.45 per cent, bringing Enbridge's interest to 49.89 per cent, for 625 million euros (including 358 million euros of assumed debt);
• Signed a definitive agreement to acquire seven operating landfill-to-renewable-natural-gas (RNG) assets located in Texas and Arkansas for $1.2-billion (U.S.) with staggered consideration;
• Upsized and relaunched the Flanagan South pipeline (FSP) binding open season for U.S. Gulf Coast delivery service;
• Closed the acquisition of Aitken Creek Gas Storage on Nov. 1;
• Debt-to-EBITDA expected to exit the year below the target range of 4.5 times to five times, reflecting substantial equity prefinancing prior to closing the acquisitions.

Chief executive officer comment

"Despite ongoing market volatility, Enbridge's four businesses delivered another solid quarter of financial performance. We saw high utilization across our systems delivering reliable, affordable and sustainable energy for our customers while upholding industry-leading safety standards. We're tracking to plan and expect to achieve our 2023 EBITDA and DCF per share guidance for the 18th consecutive year.

"During the quarter, we announced the strategic acquisition of three U.S. gas utilities, and postclosings, Enbridge will have created North America's largest gas utility platform, with approximately 7,000 employees proudly serving some seven million customers. This was a rare and unprecedented opportunity to acquire large, growing natural gas utilities located in supportive regulatory regimes at a historically attractive valuation. The utilities are accretive to Enbridge's value proposition offering reliable cash flows, enhancing our low-risk growth profile and further diversifying our asset base. We are confident these acquisitions will strengthen our ongoing dividend growth profile and deliver strong total shareholder returns.

"We're on track to close the acquisitions in 2024 and have filed all applications for required approvals in the states with jurisdiction for regulating the utilities. Since announcement, we have secured approximately 75 per cent of the required financing and have flexibility to use various alternatives, including bonds, our ongoing capital recycling program, reinstatement of our dividend reinvestment and share purchase plan (DRIP), or at-the-market (ATM) equity issuances, to fund the remaining balance. We have established a dedicated integration team which will ensure a seamless transition of the gas utilities' businesses into Enbridge's operations while continuing to deliver the service our existing and new customers expect.

"In our liquids business, we continue to see record utilization across the system, including the mainline. Interim tolls took effect on July 1 and the mainline tolling settlement is expected to be filed with the Canada Energy Regulator by year-end. At Ingleside, we exported record volumes underscoring the growing global demand and our competitive advantage in providing customers with the most cost-effective path from the Permian to tidewater. Lastly, based on customer feedback, we upsized and relaunched our Flanagan South open season, plan to initiate an open season for Gray Oak in the fourth quarter, and will offer full-path service via exports through Enbridge Ingleside Energy Center (EIEC).

"In gas transmission, we are continuing to expand our existing infrastructure to support the growing demand for safe, reliable and affordable natural gas. We are currently holding an open season on Algonquin which will provide much needed supply in New England and will help to stabilize energy prices. In addition, we closed the acquisition of Aitken Creek on Nov. 1 which will further enhance our Western Canadian LNG export strategy.

"In our gas distribution business in Ontario, we are expecting another strong year of customer growth, and the OEB [Ontario Energy Board] has approved a partial settlement proposal on the first phase of our rebasing application in Ontario. We expect the OEB to issue a final decision on the remaining issues for 2024 rates by the end of the year.

"In renewables, we're adding to our existing European portfolio by almost doubling our economic interest in the Hohe See and Albatros German offshore wind projects. This acquisition is expected to be immediately accretive to DCF per share and will be complementary to both our growth outlook and energy transition ambitions.

"We are also excited to announce that Enbridge is acquiring seven operating landfill-to-renewable-natural-gas assets located in Texas and Arkansas from Morrow Renewables. This transaction represents a uniquely derisked portfolio of operating and scalable RNG assets. These fully contracted landfill gas-to-RNG facilities are immediately accretive to DCF per share and will accelerate progress toward our energy transition goals. I am pleased to welcome the Morrow Renewables team members to the Enbridge family.

"We continue to exercise capital allocation discipline and each investment will earn attractive risk-adjusted returns. Year to date, we have executed over $3-billion of accretive tuck-in M&A and are on track to place approximately $3-billion of capital into service by year-end. Our balance sheet continues to be strong and the funding requirements for all of the newly announced projects were contemplated at the time of the gas utilities acquisitions. We exited the quarter with debt-to-EBITDA at the lower end of our target range, even prior to accounting for the beneficial impact of prefunding the acquisitions."

Financial results summary

GAAP earnings attributable to common shareholders for the third quarter of 2023 decreased by $747-million or 37 cents per share compared with the same period in 2022, primarily due to certain non-operating factors, including the absence in 2023 of a gain of $1,076-million ($732-million after-tax) on the closing of the joint venture merger transaction with Phillips 66 realigning Enrbidge's indirect economic interests in Gray Oak Pipeline and DCP Midstream LP and the absence in 2023 of a deferred tax benefit of $95-million recognized as a result of the reduced Pennsylvania state corporate income tax. The factors above were partially offset by a non-cash, net unrealized derivative fair value loss of $732-million ($552-million after-tax) in 2023, compared with a net unrealized loss of $1,334-million ($1,021-million after-tax) in 2022, reflecting changes in the mark-to-market value of derivative financial instruments used to manage foreign exchange and commodity price risks.

The period-over-period comparability of GAAP earnings attributable to common shareholders is impacted by certain unusual, infrequent factors or other non-operating factors. Refer to the company's management's discussion and analysis for the third quarter of 2023 filed in conjunction with the third quarter financial statements for a detailed discussion of GAAP financial results.

Adjusted EBITDA in the third quarter of 2023 increased by $113-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, and higher volumes on the Mainline, the Gray Oak pipeline and at EIEC. These factors were partially offset by a decrease in earnings from the company's reduced interest in DCP, lower commodity prices impacting DCP and Aux Sable, a lower mainline toll, and the timing of gas distribution storage demand and transportation costs.

Adjusted earnings in the third quarter of 2023 decreased by $92-million, or five cents per share, primarily due to higher financing costs due to higher interest rates, higher depreciation expense from assets placed into service last year and higher earnings attributable to non-controlling interests from the sale of an 11.57-per-cent non-operating interest in seven Enbridge-operated pipelines to Athabasca Indigenous Investments in Q3 2022, partially offset by higher adjusted EBITDA contributions discussed above.

DCF for the third quarter of 2023 increased by $72-million, primarily due to higher adjusted EBITDA contributions discussed above, as well as higher cash distributions in excess of equity earnings from Gray Oak Pipeline and DCP, partially offset by higher financing costs due to higher interest rates, the timing of maintenance capital spend and higher distributions to non-controlling interests as noted above.

Detailed financial information and analysis can be found below under third quarter 2023 financial results.

FINANCIAL OUTLOOK

The Company reaffirms its 2023 financial guidance for EBITDA and DCF. Results for the first nine 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.

Strong operational performance in the first nine months of the year is expected to be offset by higher financing costs, due to increased interest rates, pre-funding of the U.S. gas utilities acquisitions and a lower toll on the Mainline.

Financing update

Prefinancing the acquisitions

Since the announcement of the acquisitions, Enbridge has prefinanced approximately $8.3-billion of the $12.8-billion ($9.4-billion (U.S.)) cash consideration, significantly derisking the execution of the company's financing plan.

This prefinancing included the issuance of 102.9 million common shares for gross proceeds of approximately $4.6-billion inclusive of underwriters' 15-per-cent overallotment. The company also issued $2-billion (U.S.) of 60-year hybrid subordinated notes in the United States and $1-billion of 60-year hybrid subordinated notes in Canada which will receive partial equity treatment from rating agencies. These debt offerings were substantially hedged at favourable rates relative to the market at the time of issuance.

Enbridge intends to use the aggregate net proceeds from the offering and the hybrid issuances to pay down existing indebtedness in the near term and ultimately will finance a portion of the aggregate cash consideration payable for the acquisitions. The remaining financing requirements can be readily satisfied over the coming year through a variety of alternative sources, including the issuance of senior unsecured notes, the company's continuing capital recycling program, the potential reinstatement of Enbridge's dividend reinvestment and share purchase plan, or initiating ATM common share issuances.

General

On Aug. 17, 2023, Enbridge Pipelines Inc., a wholly owned subsidiary of Enbridge, issued $350-million of 30-year senior notes. This debt offering was entirely hedged at attractive rates.

On Oct. 4, 2023, Enbridge Gas Inc., a wholly owned subsidiary of Enbridge, issued $1-billion of senior notes consisting of $250-million of five-year senior notes, $400-million of 10-year senior notes and $350-million of 30-year senior notes. These debt offerings were partially hedged at rates favourable to the market.

Proceeds from these offerings were used to repay short-term debt, for capital expenditures and for general corporate purposes.

Enbridge anticipates exiting 2023 with its debt-to-EBITDA metric below the bottom end of its 4.5 times to five times target range due to prefinancing of the acquisitions.

Secured growth project execution update

During the third quarter, the company added approximately $5-billion of growth capital to its secured capital program, predominantly from the U.S. gas utility growth program (assuming successful closings of the acquisitions).

The company's current secured growth program is now approximately $24-billion through 2028. The company expects to place approximately $3-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 underpinned by commercial frameworks consistent with Enbridge's low-risk model.

Business updates

Enbridge's acquisition of gas utilities from Dominion

On Sept. 5, 2023, Enbridge entered into three separate definitive agreements with Dominion Energy to acquire The East Ohio Gas Company, Questar Gas Company and its related Wexpro companies, and Public Service Company of North Carolina for an aggregate purchase price of $14-billion (U.S.), comprising $9.4-billion (U.S.) of cash consideration and $4.6-billion (U.S.) of assumed debt, subject to customary closing adjustments. The acquisitions continue to be expected to close in 2024, subject to the satisfaction of customary closing conditions, including the receipt of required U.S. federal and state regulatory approvals. To date, the company has significantly derisked the acquisitions financing plan, and retains considerable optionality around the remaining unfinanced amount.

In the weeks following the announcement of the acquisitions, Enbridge established a dedicated integration team to ensure a seamless transition of the gas utilities into the company's existing operations. Enbridge and Dominion's regulatory teams are in the process of securing the required U.S. federal and state regulatory approvals to complete the acquisitions. The waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act expired on Nov. 1.

Increasing European offshore wind footprint in Germany

Enbridge, through its wholly owned subsidiary, has signed a definitive agreement with a wholly owned subsidiary of Canada Pension Plan Investment Board (CPP Investments) to purchase its interests in the Hohe See offshore wind farm and Albatros offshore wind farm for total consideration of 625 million euros, comprising 267 million euros of cash and 358 million euros of assumed debt. Together, the wind farms produce a combined 2.5 million megawatt hours of electricity, supplying energy to more than 700,000 households. This acquisition will add accretive, government-backed distributable cash flow to Enbridge's regionally diversified and growing renewable portfolio. Enbridge will indirectly own 49.89 per cent of Hohe See and Albatros (25.44 per cent prior to closing of the acquisition).

Acquiring high-quality operating landfill-to-RNG facilities

Enbridge has agreed to acquire seven operating landfill-to-renewable-natural-gas assets located in Texas and Arkansas from Morrow Renewables, reflecting the company's commitment to become an industry leader in RNG. The Morrow assets collect, compress and treat pipeline-quality RNG from landfills, all located in regions with growing demographics and supportive municipal partnerships. In aggregate, the projects produce over four billion cubic feet of RNG per year and will generate D3 renewable identification numbers (RINs). Aggregate consideration is expected to total $1.2-billion (U.S.). The assets will add immediate EBITDA and are expected to be accretive in their first full year of ownership. The transaction is expected to close in early 2024, with approximately 60 per cent of the consideration to be staggered over the following two years.

Enbridge Gas incentive regulation rate application

In October, 2022, Enbridge Gas filed its application with the Ontario Energy Board (OEB) to establish a 2024 through 2028 incentive regulation (IR) rate-setting framework. The application initially sought approval in two phases to establish 2024 base rates (phase 1) on a cost-of-service basis and to establish a price cap rate-setting mechanism (phase 2) to be used for the remainder of the IR term (2025 to 2028). A third phase (phase 3) has been established with the OEB as part of the Phase 1 partial settlement proposal.

On Aug. 17, 2023, the OEB approved the settlement proposal to support the determination of just and reasonable rates effective Jan. 1, 2024. Items resolved in whole or in part include:

• Additions to the rate base up to and including 2022;
• Interest rates on debt and return on equity;
• Deferral and variance accounts;
• Indigenous engagement;
• Rate implementation approach for 2024.

The phase 1 hearing to examine issues not resolved as part of the settlement proposal has concluded. A decision from the OEB on the outstanding phase 1 issues is expected in the fourth quarter of 2023. Phase 2 will establish and determine the 2025 to 2028 incentive rate mechanism, and gas cost and unregulated storage allocation issues. Phase 3 will address cost allocation and the harmonization of rates and rate classes between legacy rate zones.

Enbridge relaunches Flanagan South open season

Based on market feedback, the company upsized and relaunched an open season for long-term contracted service on the Flanagan South pipeline. The FSP provides service from the Enbridge mainline originating at Enbridge's Flanagan terminal in Illinois and delivers near Houston, Tex., through the Seaway pipeline. If the open season is successful, FSP will approach 90 per cent term-contracted on its 720,000-barrel-per-day capacity, reinforcing strong utilization on the full pathway, including FSP and through the mainline.

Mainline tolling agreement

In the second quarter, Enbridge 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 sees the mainline continuing to operate as a common carrier system available to all shippers on a monthly nomination basis. Enbridge expects to file the settlement, which will be subject to regulatory and other approvals, with the Canada Energy Regulator by year-end.

Conference call

Enbridge will host a conference call and webcast on Nov. 3, 2023, at 9 a.m. Eastern Time (7 a.m. Mountain Time) to provide a business update and review 2023 third 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 Oct. 31, 2023, Enbridge's board of directors declared the quarterly dividends herein. All dividends are payable on Dec. 1, 2023, to shareholders of record on Nov. 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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