Canada's pipeline operator Enbridge (NYSE: ENB) reported on Friday earnings for the fourth quarter which were below Wall Street forecasts, as lower tolls on the Mainline pipeline system and lower natural gas prices weighed on core and net profits.
Enbridge booked adjusted earnings per share of US$0.48 (C$0.64) for the fourth quarter, slightly up compared to the same period of 2022, but below the analyst estimate of US$0.51 (C$0.68).
Higher depreciation from assets acquired or placed into service in 2023 and higher interest expense due to higher interest rates weighed on Enbridge's adjusted earnings in the last quarter of 2023.
Full-year adjusted earnings per share decreased by US$0.015 (C$0.02 compared with 2022 due to the factors discussed above, the company said.
For the fourth quarter, Enbridge's core earnings, or adjusted EBITDA, were impacted by lower Mainline tolls effective July 1 and a lower Line 3 Replacement (L3R) surcharge.
While the Mainline System saw higher throughput driven by higher crude demand, the profits were partially offset by the lower Mainline System tolls.
The Mainline system moves over 3 million barrels a day of crude oil and liquids from Western Canada to the demand markets in the United States.
In May 2023, Enbridge reached a toll agreement with shippers for the system, with tolls lower than in the previous deal, after ditching plans to move to long-term contracts.
The tolling agreement 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's core earnings in its Gas Transmission and Midstream division fell in both the fourth quarter and full-year 2023, due to lower commodity prices and higher operating costs.
"We adhered to our capital allocation priorities as we continued to grow the company while maintaining our target leverage ratio and returning capital to shareholders through a sustainable and growing dividend," Enbridge president and CEO Greg Ebel said.
By Charles Kennedy for Oilprice.com
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