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Canada's pipeline operator Enbridge (NYSE: ENB) reported on Friday a loss for the fourth quarter of 2022, compared to a profit for the same period of 2021, due to a non-cash goodwill impairment of US$1.86 billion (C$2.5 billion) in its gas transmission reporting unit.
Enbridge, which moves large volumes of oil and gas in North America –including on the Mainline transportation system which moves more than 50% of all Canadian crude oil exports – booked a loss of US$794 million (C$1.067 billion) for the fourth quarter of 2022, versus earnings of US$1.37 billion (C$1.84 billion) for the same period of the previous year.
Full-year earnings halved in 2022 from 2021.
The loss for the fourth quarter is primarily explained by the non-cash goodwill impairment relating to the Gas Transmission reporting unit as a result of the increased cost of capital, Enbridge said in a statement.
The full-year 2022 earnings were negatively impacted by the goodwill impairment and non-cash, net unrealized derivative fair value losses reflecting changes in the mark-to-market value of derivative financial instruments used to manage foreign exchange risks.
"Despite the uncertainty and volatility of 2022, our full year results came in at the top half of our guidance range, reflecting the strength of our four core businesses and the resiliency of our low-risk business model," Enbridge's president and chief executive officer Greg Ebel said, commenting on the results.
"As we look forward, it is clear the world needs all forms of energy to meet demand. At the same time, there is a global imperative to reduce emissions. Balancing these priorities is critical and remains foundational to our strategy."
Enbridge expects growth in financials this year to be driven by strong utilization of the Mainline system, full-year contributions from projects placed into service during 2022, and the impact of foreign exchange rates. Those growth-driving factors could be partially offset by higher financing costs and distributions to non-controlling interests from the sale of an interest in certain Regional Oil Sands assets.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com