Enbridge Reports Another Strong Year and Provides Favourable Outlook
biz.yahoo.com
Wednesday January 31, 7:00 am ET
CALGARY, ALBERTA--(MARKET WIRE)--Jan 31, 2007 -- Enbridge Inc. (Toronto Future:ENB.TO) (NYSE:ENB)
Highlights
All financial information is unaudited.
- 2006 reported earnings increased 11% to $615.4 million for the full year
- Adjusted operating earnings increased 10% for the full year
- Adjusted operating earnings increased for the fourth quarter to $172.4 million
- Industry support obtained for Southern Lights Project, Alberta Clipper Project and Line 4 Extension
"Enbridge Inc. had an excellent year in 2006 as adjusted operating earnings per common share increased 9.4% to $1.74", said Patrick D. Daniel, President & Chief Executive Officer. "This result is at the upper end of our previously stated earnings guidance range and reflects solid operating performance in all of our core businesses." Mr. Daniel continued, "Based on our outlook for 2007, it is our expectation that performance will continue to be strong and adjusted operating earnings for 2007 will be in the range of $1.75 to $1.85 per common share."
"We continue to capitalize on our competitive advantage. Our existing pipeline networks and rights of way provide considerable flexibility and opportunities for cost-effective crude oil pipeline expansion and extension projects that respond to customer needs. We continue to diversify the Company's business through the development of natural gas pipeline projects, both offshore and onshore, as well as investments in new technologies and wind power." Mr. Daniel added, "The result is a solid, visible growth outlook for the Company.
Two of our newer projects will reinforce our scale advantage. The Line 4 Extension expands the capacity of the crude oil mainline between Edmonton and Hardisty, Alberta, and the Alberta Clipper Project involves the construction of an additional pipeline between Hardisty and Superior, Wisconsin. We are pleased that our shippers have recently affirmed their support for both of these projects."
Financial Performance
Earnings applicable to common shareholders were $615.4 million for the year ended December 31, 2006, or $1.81 per share, compared with $556.0 million, or $1.65 per share, in 2005. The $59.4 million increase in earnings was primarily the result of higher earnings from the Enbridge crude oil mainline system, strong results from Enbridge Energy Partners, LP (EEP) and from the Aux Sable natural gas fractionation facility. The 2006 results also included $48.9 million from the revaluation of future income tax balances due to tax rate reductions enacted in 2006. These positive factors were partially offset by a lower earnings contribution from Enbridge Gas Distribution (EGD), as the weather in the Ontario market was significantly warmer than normal during 2006.
Fourth quarter earnings for 2006 were $171.1 million, or $0.50 per share, compared with $174.0 million, or $0.52 per share, in 2005. The fourth quarter of 2006 reflected higher earnings from the mainline system and Aux Sable, offset by lower earnings from EGD due primarily to warmer than normal weather and higher costs in the fourth quarter of 2006.
Project Development Update
The Company has made significant progress during 2006 in advancing strategic growth projects designed to provide crude oil shippers with low cost access to diverse markets.
The Spearhead Pipeline commenced operations in early March 2006, delivering Canadian crude from Chicago, Illinois to Cushing, Oklahoma. Throughput has increased steadily, surpassing the Company's expectations. In the fourth quarter of 2006, nominations have exceeded the 125,000 barrel per day (bpd) capacity. The Company is considering expanding the capacity of Spearhead during 2007 to meet this demand.
Construction has started on the Southern Access Expansion, which will ultimately add 400,000 bpd of additional capacity to the crude oil mainline from Edmonton, Alberta to Chicago at a cost to Enbridge of approximately $0.2 billion. The additional capacity on the Canadian portion is scheduled to come into service in phases, which started in 2006 and will conclude in 2009. The U.S. portion of the expansion is estimated to cost approximately US$1.3 billion and is being undertaken by EEP, the Company's 16.6% owned affiliate, which owns the U.S. portion of the mainline.
In January 2007, the Company obtained industry support for the 450,000 bpd Alberta Clipper Project. This project would involve the addition of a new line to the Enbridge mainline system between Hardisty, Alberta and Superior, Wisconsin at a cost of approximately $1.5 billion (2006 dollars) to Enbridge and US$0.8 billion (2006 dollars) to EEP. Enbridge expects to finalize commercial terms in the first quarter of 2007 and, subject to receipt of required regulatory approvals, is targeting to have the Alberta Clipper Project in service between late 2009 and mid 2010.
The Company has also obtained industry support for the $0.3 billion Line 4 Extension Project. This project will extend Line 4 from its current initiation point at Hardisty, Alberta back upstream to the Company's terminal at Edmonton. Subject to receipt of required regulatory approvals, the Line 4 extension project is targeted to be in service in late 2008.
Current shipper preferences and the demand to accelerate the development of capacity to traditional U.S. markets will likely result in the Alberta Clipper Project preceding the Gateway Project. The Gateway Project includes both a petroleum export line and a condensate import line between Edmonton and Kitimat, British Columbia. The revised in service date for the Gateway Project is expected to be 2012 to 2014.
The Company is also developing a US$0.4 billion project to extend the mainline from Flanagan, Illinois to Patoka, Illinois. The Southern Access Extension is supported by industry. An initial Offer of Settlement proposing a rolled in tolling structure for the extension was not approved by the Federal Energy Regulatory Commission (FERC), however shipper support for the project continues to be strong and the Company is working with industry to prepare an alternative tolling structure. The Company expects to file a second application with the FERC in the first quarter of 2007 to allow the project to continue on schedule with an estimated in service date in 2009.
In 2006, the Company announced its intention to build the US$1.3 billion Southern Lights Pipeline, which would transport diluent from Chicago back to Edmonton where it is needed for blending with bitumen production from the oil sands. Enbridge successfully closed a binding open season in July 2006 and in the fourth quarter of 2006, received industry support for the project. The Company expects to file remaining regulatory applications in the first quarter of 2007. Subject to receipt of required regulatory approvals, Southern Lights is expected to be in service by mid 2010.
The Company advanced a number of upstream development projects during 2006. An application for regulatory approval was filed for the $0.5 billion Waupisoo Pipeline project, which would transport crude oil from the Cheecham Terminal on the Athabasca Pipeline to Edmonton and is expected to be in service in mid-2008. The Stonefell Terminal Project, near Fort Saskatchewan, Alberta, has received regulatory approval and is proceeding, with a target in-service of mid 2008. Construction on the Surmont Project, which includes pipeline and tank facilities required by the Surmont Oil Sands Project at the Cheecham Terminal, was completed and first throughput is expected in 2007. The Long Lake Project is under construction at the Cheecham Terminal and completion of these pipelines and tanks is expected in early 2007, to coincide with first production from the Long Lake Oil Sands Project.
Enbridge and EEP are developing a number of opportunities to build crude oil contract terminals in both Canada and the U.S. Enbridge is advancing plans to build a new terminal at Hardisty and has executed contracts for over 80% of the expected 7.5 million barrel capacity. Enbridge has also agreed to provide terminaling services to BA Energy Inc. for their bitumen upgrader, currently under construction at Fort Saskatchewan, Alberta. EEP is progressing on the construction of various terminal projects at Cushing, Oklahoma, Superior, Wisconsin and Griffith, Indiana.
Enbridge is also advancing a number of natural gas pipelines projects. The expansion of Vector Pipeline has been approved by the FERC and is expected to be completed in the fourth quarter of 2007. The Neptune Pipeline project will connect the deepwater Neptune oil and gas field through natural gas and crude oil laterals currently under construction by the Company in the Gulf of Mexico. Enbridge also plans to construct a natural gas lateral to connect the deepwater Shenzi field to existing Gulf of Mexico pipelines. The Neptune laterals are expected to be in service in 2007 and the Shenzi lateral is expected to begin transporting natural gas in 2009. |
