Enbridge Inc. · TSX:ENB
Enbridge — Investor Presentation (May 2019)
41 slides from Enbridge's investor presentation, May 2019
Slide 1: Enbridge Inc. (ENB) Investment Community Presentation
Enbridge Inc. (ENB) Investment Community Presentation May 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: 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, May 2019) $140 Natural $120 $100 Gas ~$13B Liquids $80 $60 $40 Other $20 $0 ENB ET EPD TRP KMI WMB OKE PPL Delivering North
Slide 4: 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 5: 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 6: 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 4 • Sponsored vehicle buy-ins completed Streamlin
Slide 7: Key Priorities for 2019
Key Priorities for 2019 ENB Value Proposition 1 Achieve 2019 DCF guidance range of $4.30 - 4.60/share 2 Focus on Line 3 Replacement milestones 3 Advance priority access on Mainline 4 Extend secured growth Line 3 Construction 5 Maintain balance sheet strength & flexibility Line 3 Replacement 7
Slide 8: Enterprise-wide Secured Growth Project Inventory
Enterprise-wide Secured Growth Project Inventory Project Expected ISD Capital ($B) AOC Lateral Acquisition In-service 0.3 CAD Stratton Ridge 2Q19 0.2 USD Generation Pipeline Acquisition 2H19 0.1 USD 2019 Hohe See Wind & Expansion – Germany 2H19 1.1 CAD Gray Oak Pipeline 4Q19 0.7 USD Utility Growth C
Slide 9: 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 10: 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 2016 201
Slide 11: Growth Outlook Summary
Growth Outlook Summary • Strong organic growth opportunities from 3 core businesses Through 2020 Post 2020 5-7% • Low risk business model • Self funded equity • Prudent leverage levels 10% Dividend per share DCF per share growth rate growth rate • Disciplined capital allocation 3 year dividend growt
Slide 12: 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 13: 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 13
Slide 14: Appendix A: Core Business Details
Appendix A Core Business Details
Slide 15: Liquids Pipelines
Liquids Pipelines ZENBRIDGE
Slide 16: 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 17: 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 • T
Slide 18: Mainline Contract Offering
Mainline Contract Offering Design Considerations • Incorporating feedback from producers (large & small), integrateds, refiners, marketers • Single Transportation Service Agreement (TSA) that fulfills regulatory requirement for open and fair access Key Offering Features • Priority access for contrac
Slide 19: Mainline Optimization - 2019
Mainline Optimization - 2019 2019: Additional Mainline Average Mainline Throughput Optimizations (ex-Gretna throughput MMbpd) 2,750 2,717 Edmonton 2,685 2,625 2,636 50- Record Hardisty 2,578 volumes Kerrobert 100 2,500 2,530 in 1Q19 kbpd Regina Cromer 2,250 Gretna ND Superior MN WI 2,000 2017 1Q18 2
Slide 20: 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 20
Slide 21: Line 3 Replacement Project
Line 3 Replacement Project • Critical energy infrastructure replacement • Canadian construction expected to be complete Edmonton by end of May 2019 Hardisty • Wisconsin segment complete and in-service Kerrobert • North Dakota regulatory and permitting complete Regina In service Canadian segments • M
Slide 22: Line 3 Minnesota Permitting Timeline
Line 3 Minnesota Permitting Timeline Minnesota Pollution Control Agency (MPCA) 401 Water Quality Certification Timetable TODAY OCT ‘18 NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC Oct 30, ‘18 Nov 2018 – Apr 15 Permit Mid-late MPCA completeness review and draft Apr 15 - Application Certifi
Slide 23: 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 24: 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 25: USGC - Export Development Opportunity
USGC - Export Development Opportunity Texas COLT Offshore Loading Terminal • Direct full loading of VLCCs from Freeport, TX • Superior connectivity to all key North American supply basins via Enbridge systems and others Genoa • Strong interest from a broad base of potential Junction customers • In s
Slide 26: Gas Transmission
Gas Transmission ZENBRIDGE
Slide 27: 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 28: 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 29: Rate Case Proceedings
Rate Case Proceedings Texas Eastern: East Tennessee: Algonquin: • Section 4 Rate Case filed Nov 2018 • Nearing completion of Section 5 Rate • Preparing for early stage rate discussions • Potential for revenue enhancement with Case proceedings with customers in the coming months updated cost of servi
Slide 30: Potential Growth Opportunity Summary
Potential Growth Opportunity Summary Focus on LNG Opportunities W. Canada Northeast & • T-North and T-South expansions New England • Alliance and Aux Sable expansion • Enhance U.S. northeast opportunities connectivity between regional supply and growing • NGL infrastructure solutions power and LDC d
Slide 31: 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 32: 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 $1-2B in opportunities Continued growth
Slide 33: Gulf Coast Markets - Potential Growth
Gulf Coast Markets - Potential Growth Exports to Gulf Coast & Mexico • Texas Eastern, Brazoria Interconnector MS Gas and Valley Crossing assets well connected to deliver to Gulf Coast LNG and Mexico markets Permian LA Permian TX NOLA • Expanding Permian supply pushing to feed growing Gulf Coast expo
Slide 34: Western Canada - Potential Growth
Western Canada - Potential Growth Western Canada T-North • Growing supply presents many Montney / Duvernay infrastructure opportunities to support Expansions Montney and Duvernay: − Pipeline expansions: T-North, T-South, AB Alliance BC − NGL infrastructure solutions − Greenfield LNG T-South Transmis
Slide 35: Utilities
Utilities ZENBRIDGE
Slide 36: Utilities Business
Utilities Business Ontario Population Growth Forecast 18.5 14 million million Toronto 1998 2018 2020 2025 2030 2035 2040 Source: Ontario Ministry of Finance • Largest volume and fastest growing franchise • Infrastructure positioned to serve growing supply basins and growing end use markets • 280 bcf
Slide 37: Utilities - Strategic Growth Prospects
Utilities - Strategic Growth Prospects • Largest and fastest growing gas utility franchise in North America • Steady annual growth opportunities through new customer additions and system expansions • Amalgamation synergies 1-2% • Cost management per year base business • Revenue escalators growth pos
Slide 38: Utility Growth Outlook
Utility Growth Outlook Incentive Rate Structure Growth through Dawn to Parkway system community expansions expansion project 10% Expected range of OTTAWA ON Actual ROE 9% TORONTO NY ~9% DAWN Allowed ROE MI HUB 8% Kirkwall Hamilton DETROIT project OEB allowed ROE PA Actual ROE Expansion community OH
Slide 39: Appendix B: Financial Guidance
Appendix B Financial Guidance
Slide 40: Financial Outlook
Financial Outlook1,2 2019 Distributable Cash Flow (DCF) Consolidated DCF/share ($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
Slide 41: Re-affirming 2019 Financial Outlook
Re-affirming 2019 Financial Outlook 2019 Distributable Cash Flow (Consolidated DCF/share ) 2 Q1 STRENGTH • Energy Services $4.42 $4.30 – 4.60 • Colder weather in Utilities franchise area Q2-Q4 HEADWINDS: $3.68 • Line 3 delay • Integrity expense • Other O&A timing 2017 2018 2019e Strong start to 2019