By JEFF LEWIS
Saturday, February 17, 2018
CALGARY -- Enbridge Inc. is on track to shed $3-billion in assets this year and would consider opportunities to sell more if presented with attractive offers, its chief executive officer says.
CEO Al Monaco reiterated plans on Friday to dispose of its onshore renewables business as well as natural gas processing infrastructure in Canada and the United States as the company seeks to cut debt and fund $22billion in major projects.
The Calgary-based pipeline giant won't accelerate dispositions even though it has identified at least $10-billion worth of noncore assets, Mr. Monaco told analysts on a conference call. Interest in the renewables and processing infrastructure has been strong, he said.
"There's certainly nothing that indicates to us that additional asset sales will be required, but obviously if there are ideas that come forward or offers that are put on the table that we can't turn down, then we'll probably have a look at those," he said.
Enbridge is keen to repay debt and streamline operations after its $37-billion acquisition last year of U.S. rival Spectra Energy Corp., one of several large, crossborder transactions by Canadian infrastructure firms.
The massive deal vastly expanded its network of pipelines in North America, but it has also added to Enbridge's complexity and stoked worries about the company's ability to fund rising dividend payments and growth projects.
To shore up finances, Enbridge issued $2.6-billion in preferred and common equity late last year and throttled back dividend growth plans to 10 per cent from a previous range of 10 per cent to 12 per cent. It also pledged to jettison at least $3-billion in assets this year.
Despite the financial moves, Moody's Investors Service Inc. in December cut its rating on Enbridge debt to one notch above junk status, saying the company's blueprint to improve key leverage metrics will be slow to deliver results.
Enbridge shares have slumped about 18 per cent so far this year, reflecting broader concerns over impacts of rising interest rates and changes to U.S. tax policy on infrastructure and utility companies.
The shares edged up slightly in Friday's session on the Toronto Stock Exchange after Enbridge reported net income for the three months ended Dec. 31 of $207-million, or 13 cents a share, compared with a year-ago profit of $365-million or 39 cents.
In the quarter, the company booked a $4.55-billion charge to write down the value of gas pipelines and processing infrastructure. Excluding such items, the adjusted earnings were $1.01-billion or 61 cents a share, versus $522-million or 56 cents a year ago.
Enbridge said it has started construction on the Canadian portion of its $9-billion Line 3 pipeline and insists crude will flow by late 2019, even though it is still awaiting final clearances from regulators in Minnesota.
Enbridge wants to replace the 1960s-era Line 3 conduit, which runs from Hardisty, Alta., to Superior, Wis., with a new pipeline, restoring capacity to 760,000 barrels a day from a little more than half that level today.
The expansion is one of three proposed pipelines supporters say are critical to expanding markets for Alberta's landlocked oil-sands producers, which are suffering from sharp price discounts as rising supplies butt up against export limits.
Enbridge's mainline network has been subject to hefty restrictions for three months straight as orders to ship crude exceed its 2.85-million-barrel-a-day capacity, indicating strong demand for the system.
Mr. Monaco reiterated on Friday the company has no immediate plans to reduce its web of subsidiaries, despite repeated questions over its complex corporate structure after the Spectra deal. It has already moved to streamline operations, he said.
"We certainly are not blind to the fact that people prefer simplicity in this market, which we agree with," he told analysts.
ENBRIDGE (ENB) CLOSE: $43.03, DOWN 19¢
Enbridge's crude oil pipelines and storage tanks are seen in Cushing, Okla., in 2016. In this past quarter, Enbridge booked a $4.55-billion charge to write down the value of pipelines and processing infrastructure.