Enbridge Q1 Earnings Dip, Spectra Takeover To Boost 2017 Profit

Canada’s Enbridge Inc reported on Thursday first-quarter earnings halved compared to the same period last year, but said that it expects full-year adjusted earnings before tax to jump following the stock-for-stock deal to buy Houston-based Spectra Energy.

Enbridge’s earnings attributable to common shareholders dropped to US$465 million (C$638 million) in Q1, compared to US$884 million (C$1.213 billion) for the first quarter of 2016, due to decreased earnings before tax at the Liquids Pipelines segment, on the back of a lower effective foreign exchange rate and the sale of some assets.

Following the deal to buy Spectra—first announced in September 2016 and completed in February 2017—Enbridge expects full-year 2017 and adjusted earnings before interest and taxes of US$5.246 billion to US$5.537 billion (C$7.2 billion to C$7.6 billion). For 2016, Enbridge’s adjusted EBIT was US$3.397 billion (C$4.662 billion).

Following a quarterly increase in dividend in January, Enbridge is now raising its quarterly payout to shareholders again, for “a total increase of 15% above the prevailing quarterly rate in 2016.”

During Q1, Enbridge closed the US$1.5 billion acquisition of a 27.6-percent interest in the Bakken Pipeline System that consists of the Dakota Access Pipeline and the Energy Transfer Crude Oil Pipeline projects. The pipelines are expected to go into service in the second quarter of 2017, Enbridge said.

“The Bakken Pipeline System enhances our presence in the Bakken and the United States Gulf Coast and will be accretive to ACFFO [available cash flow from operations] immediately in 2017,” said Al Monaco, President and Chief Executive Officer of Enbridge.

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Last November, Canada’s Prime Minister Justine Trudeau conditionally approved Enbridge’s Line 3, despite environmentalist opposition to the project. Trudeau, however, rejected Enbridge’s Northern Gateway, because of what he deemed were excessive risks.

Commenting on the decisions, Enbridge said back then that it was pleased by the Federal Government’s decision to approve the Line 3 Replacement Program, and added that the anticipated in-service date for the project is 2019, contingent upon U.S. regulatory approvals.

By Tsvetana Paraskova for Oilprice.com

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