Enbridge Inc. · TSX:ENB
Enbridge — Investor Presentation (March 2019)
40 slides from Enbridge's investor presentation, March 2019
Slide 1: Investment Community Presentation
Enbridge Inc. (ENB) Investment Community Presentation March 2019
Slide 2: Legal Notice
Legal Notice Forward Looking Information This presentation includes certain forward looking statements and information (FLI) to provide potential investors and shareholders of Enbridge Inc. (Enbridge or the Company) with information about Enbridge and its subsidiaries and affiliates, including manag
Slide 3: Recent Disclosure Update
Recent Disclosure Update Line 3 Replacement Project • On March 1, 2019, the State of Minnesota provided a definitive timeline for reviewing and issuing its environmental permits • This new permitting timeline pushes out the Company’s prior expectation of an in-service date before the end of 2019 • T
Slide 4: A North American Bellwether Infrastructure Company
Enbridge: A North American Bellwether Infrastructure Company 2019 EBITDA Outlook Enterprise Value (North American Midstream Companies) by business unit (US$,B, Source: Factset, Mar 2019) $140 Natural $120 $100 Gas ~$13B Liquids $80 $60 Other $40 $20 $0 ENB ET EPD TRP KMI WMB OKE PPL Delivering North
Slide 5: Three Core Businesses
Three Core Businesses ~50% ~30% ~15% 2019e EBITDA 2019e EBITDA 2019e EBITDA Liquids Pipelines Gas Transmission Gas Utilities • World’s longest and most sophisticated • Connects key North American supply • Largest natural gas utility in North crude oil and liquids transportation system basins to larg
Slide 6: Enbridge's Low Risk Business Model
Enbridge’s Low Risk Business Model 2019e EBITDA Resiliency in All Market Conditions • Regulated “cost of service” contracts $14,000 $100 WTI • Long term contracts $12,000 ~98% $75 $10,000 • Interest rate / inflation protection $8,000 • Insignificant commodity risk Regulated/Take or Pay/ $50 Fixed Fe
Slide 7: Major 2018 Accomplishments
Major 2018 Accomplishments Priorities Actions 1 Deliver strong results Record DCF/share and EPS performance in 2018 2 Focus on low risk pipeline-utility model ~$8B of non-core asset sales 3 Accelerate de-leveraging 4.7x Debt-to-EBITDA; DRIP suspended • Sponsored vehicle buy-ins completed 4 Streamlin
Slide 8: 2019+ Strategic Priorities
2019+ Strategic Priorities Continuing Priorities • Reliable, growing cash flow and dividends • Low risk pipeline-utility model • Strong investment grade balance sheet • Streamlined business • Strong project execution • Extend growth Areas of Emphasis Enhance Expand, Self core extend funding business
Slide 9: Enterprise-wide Secured Growth Project Inventory
Enterprise-wide Secured Growth Project Inventory Project Expected ISD Capital ($B) AOC Lateral Acquisition 1Q19 0.3 CAD Generation Pipeline Acquisition 1Q19 0.1 USD Stratton Ridge 1H19 0.2 USD 2019 Hohe See Wind & Expansion – Germany 2H19 1.1 CAD Gray Oak Pipeline 2H19 0.6 USD Utility Core Capital 2
Slide 10: Post 2020 Future Growth Opportunities
Post 2020 Future Growth Opportunities $5-6B annual self-funding capability ~$2B ~$2-3B ~$1B Liquids Gas Gas Pipelines Transmission Utilities • Mainline system optimizations • USGC market connections • Customer additions and enhancements • US S.E. and US N.E. expansions • New Communities • Market acc
Slide 11: Financial Strength & Flexibility
Financial Strength & Flexibility Consolidated DEBT to EBITDA1 Enbridge Inc. Sr. Unsecured Debt Ratings2 6.0x 5.5x Standard & Poors BBB+ Target Range: stable 4.5x to comfortably below 5.0x 5.0x Fitch BBB+ stable 4.5x 4.0x DBRS BBB High stable 3.5x Moody’s Baa2 Upgraded Jan. ‘19 positive 3.0x 3 3 2016
Slide 12: Growth Outlook Summary
Growth Outlook Summary • Strong organic growth opportunities from 3 core businesses Through 2020 Post 2020 • Low risk business model • Self funded equity 10% 5-7% DCF per share • Prudent leverage levels Dividend per share growth rate growth rate • Disciplined capital allocation 3 year dividend growt
Slide 13: Dividend Growth Track Record
Dividend Growth Track Record • 24 years of sustained dividend increases 10% 3 Year CAGR • 10% dividend increase declared for 2019 (2018-2020) • 10% 3-year dividend CAGR outlook, 2018-2020 11% • Target payout ratio of below 65% DCF 24 Year CAGR (1996-2019) 1996 2018 2019 2020e Long history of strong
Slide 14: Enbridge's Value Proposition
Enbridge’s Value Proposition • Leading energy infrastructure position • Low-risk pipeline/utility business model • Strong investment grade credit profile • 10% dividend growth through 2020 • 5-7% DCF growth beyond 2020 Long-life attractive growing yield with lowest risk profile in the sector 14
Slide 15: Appendix A: Core Business Details
Appendix A Core Business Details
Slide 16: Liquids Pipelines
Liquids Pipelines ZENBRIDGE
Slide 17: Liquids Pipelines System
Liquids Pipelines System WCSB Oil Supply (kbpd) 70% 6,000 CAPP 2018 Supply Forecast of total oil sands production can be transported on the 5,000 >1 Regional system to Edmonton and Hardisty 4,000 Oil sands heavy MMb/d Growth by 2035 65% 3,000 2,000 of Canadian crude Upgraded light exports to 1,000 t
Slide 18: Liquids Pipelines - Strategic Growth Prospects
Liquids Pipelines - Strategic Growth Prospects • Critical link from WCSB to premium Midwest and USGC refining markets • Leverage existing footprint to expand crude export capacity and develop integrated USGC platform • Mainline toll framework 2-3% • Throughput optimization per year base business gro
Slide 19: Mainline Contract Offering
Mainline Contract Offering Annual Mainline Volume (ex-Gretna throughput MMbpd) Key Features of Contract Offering 2,685 • Priority Access for contracted volume 2,625 2,636 • Contract term up to 20 years 2,578 2,530 2,405 • Contracts tailored to shipper type • Toll discounts for high volume shippers 2
Slide 20: Interim Mainline Optimizations 2019/2020
Interim Mainline Optimizations 2019/2020 Ex-WCSB Egress Bakken Pipeline (BPEP) Delivery Reduction Edmonton • Reduce deliveries into Cromer to increase available capacity for WCSB egress Hardisty 50- Line 3 Replacement – Canada Kerrobert 100 kbpd • Begin line-fill and terminal injections in Canada ah
Slide 21: Additional Long-Term Throughput Enhancements
Additional Long-Term Throughput Enhancements Ex-WCSB Egress +150 +300 +370 Southern System Lights Optimizations & Reversal L3 Enhancements Replacement Capacity 2015 2018 2023 Staged and achievable incremental throughput initiatives to support WCSB egress 21
Slide 22: Line 3 Replacement Project
Line 3 Replacement Project • Critical energy infrastructure replacement with state of the art pipeline technology, supporting: Edmonton – environmental protection Hardisty – reliable local energy supply Kerrobert – low energy costs – jobs & economic development Regina In service Canadian segments –
Slide 23: Minnesota L3R Execution Timeline
Minnesota L3R Execution Timeline Dec 2017: FEIS Adequacy Determination by MPUC PUC Review & Approval Jun 2018: Certificate of Need / Route Permit approval by MPUC Permitting Phase Aug 2018: Easement Agreement with Fond Du Lac Construction Phase Sep - Dec 2018: 4+ year Regulatory Process MPUC issues
Slide 24: Mainline Optimization and Enhancement Opportunities
Mainline Optimization and Enhancement Opportunities Ex-WCSB Egress $3B 2020-21 Mainline Optimizations 2022+ Mainline Optimizations Southern Lights Reversal in opportunities Edmonton Edmonton Edmonton Hardisty Hardisty Hardisty Kerrobert Kerrobert Regina Regina Current Flow Cromer Cromer Direction 20
Slide 25: Market Access - Downstream Expansion Opportunities
Market Access - Downstream Expansion Opportunities • Mainline optimizations provide an Hardisty opportunity to increase market access pipelines by up to 350kbpd – Flanagan South expansion of 250kbpd along with corresponding Seaway expansion – Southern Access Extension expansion of 100kbpd to Patoka
Slide 26: USGC - Export Development Opportunity
USGC - Export Development Opportunity Texas COLT Offshore Loading Terminal • Partners: Kinder Morgan and Oiltanking • Direct full loading of VLCCs from Freeport, TX • Superior connectivity to all key North American supply basins via Enbridge systems and others Genoa Junction • Strong interest from a
Slide 27: Gas Transmission
Gas Transmission ZENBRIDGE
Slide 28: Gas Transmission System
Gas Transmission System Natural Gas Demand by Sector (N. America, Bcf/d) Canadian Gas Transmission & Midstream LNG Exports Mexico Exports Other Power Gen Industrial Residential/ Commercial 2018 2020 2025 2030 Source: Wood Mac, PIRA U.S. U.S. • Strategically located assets Midstream Transmission • Re
Slide 29: Gas Transmission - Strategic Growth Prospects
Gas Transmission - Strategic Growth Prospects • Premier demand-pull driven asset base serving key regional markets • Positioned for significant growth in 4 key regions 1-2% • Rate cases per year Western base business • System modernization Canada growth post-2020 Northeast & • T-South expansion New
Slide 30: Northeast & New England - Potential Growth
Northeast & New England - Potential Growth Northeast / New England • Continued commercial / residential load growth • Proven approach to bring affordable natural gas to the region Power Generation Market • Incremental demand market will drive Marcellus New England BOSTON gas expansion opportunities
Slide 31: Southeast Markets - Potential Growth
Southeast Markets - Potential Growth Southeast Markets GA • Generating capacity in Florida is expected MS to grow by 15+% by 2026 AL • Majority of this growth is projected to be Power Generation natural gas-fired generation Opportunities FL NOLA ORLANDO TAMPA $1-2B in opportunities Continued growth
Slide 32: Gulf Coast Markets - Potential Growth
Gulf Coast Markets - Potential Growth Exports to Gulf Coast & Mexico • Texas Eastern, Brazoria Interconnector MS Gas and Valley Crossing assets well connected to deliver to Gulf Coast LNG and Mexico markets Permian LA Permian TX NOLA • Expanding Permian supply pushing to feed growing Gulf Coast expo
Slide 33: Western Canada - Potential Growth
Western Canada - Potential Growth Western Canada T-North • Growing supply presents many Montney / Duvernay infrastructure opportunities to support Expansions Montney and Duvernay: − Pipeline expansions: T-North, T-South, AB Alliance BC − NGL infrastructure solutions − Greenfield LNG T-South Transmis
Slide 34: Utilities
Utilities ZENBRIDGE
Slide 35: Utilities Business
Utilities Business Ontario Population Growth Forecast 18.5 14 million million Toronto 1998 2018 2020 2025 2030 2035 2040 • Largest volume and fastest growing franchise • Infrastructure positioned to serve growing supply basis and growing end use markets • 280 bcf of Dawn Storage with growth potentia
Slide 36: Utilities - Strategic Growth Prospects
Utilities - Strategic Growth Prospects • Largest and fastest growing gas utility franchise in North America • Steady annual growth opportunities through new customer additions and system expansions • Amalgamation synergies 1-2% • Cost management per year base business • Revenue escalators growth pos
Slide 37: Utilities - Growth Driven by Rate Base Expansion
Utilities - Growth Driven by Rate Base Expansion Combined Rate Base Growth (C$,B) 12 10 8 Union Gas 6 4 2 EGD OTTAWA 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Utility ROE 10% Expected range of Actual ROE DAWN TORONTO 9% HUB ~9% 8% Allowed ROE OEB allowed ROE Expansion communities 7% Actual
Slide 38: Appendix B: Financial Guidance
Appendix B Financial Guidance
Slide 39: Financial Outlook: 2019 Consolidated EBITDA guidance
Financial Outlook1 2019 Consolidated EBITDA guidance Consolidated EBITDA2 ($MM) 2019 EBITDA Guidance 2019e ($MM) Growth Drivers: 2019e vs 2018 Liquids Pipelines ~6,800 + Higher Bakken Pipeline volumes $12,849 ~$13,000 + New projects placed into service Gas Transmission & Midstream ~4,000 - Asset mon
Slide 40: Financial Outlook: 2019 Distributable Cash Flow (DCF)
Financial Outlook1,2 2019 Distributable Cash Flow (DCF) Consolidated DCF/share ($MM, except per share amounts) 2019 Guidance Adjusted EBITDA ~$13,000 Maintenance capital ~(1,200) $4.30 - 4.60 $4.42 Current income taxes3 ~(400) $3.68 Financing costs ~(3,000) Distributions to non-controlling interests