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Capital Markets | Capital Expenditure | Capital Expenditure - 2021

Enbridge Inc. Details 2021 Capital Plans, Outlook

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   |    Tuesday,December 08,2020

Enbridge Inc. announced its 2021 financial guidance and dividend and provided an update on its strategic priorities.


  • Re-affirmation of 5-7% average long-term annual distributable cash flow (DCF) per share growth outlook, based on an equity self-funded model
  • The Company expects full-year 2020 DCF per share to be near the mid-point of the $4.50 to $4.80 guidance range
  • Announced 2021 Financial Guidance: 2021 projected DCF per share of $4.70 to $5.00, and earnings before interest, taxes, depreciation and amortization (EBITDA) of $13.9 to $14.3 billion
  • The Company declared its 26th consecutive annual common share dividend increase, raising it by 3% to $0.835/quarter ($3.34 annually), effective March 1, 2021
  • Execution of the Company’s $16 billion secured growth capital program continues to advance, generating approximately $2 billion of expected EBITDA growth from 2021 to 2023
  • Construction has commenced on the remaining Minnesota leg of the U.S. Line 3 Replacement project
  • Weymouth compressor was approved by regulators on November 25 to commence operations, completing the U.S.$0.1 billion Atlantic Bridge project, which provides expanded gas supply into New England and the Maritimes

Commenting on the Company’s operations, strategic priorities and outlook, Al Monaco, President and CEO of Enbridge, noted the following: “Over the past year, the energy industry has faced unparalleled challenges. While our business has not been immune, we’ve proven again that our low-risk commercial model generates resilient cash flows in all market conditions. Our infrastructure is in high demand and is essential to North America’s economy, and we’re confident that it will be for many decades.

“We responded quickly to protect the health and safety of our people and to ensure critical operations were maintained. The criticality of what we do means that the safety and reliability of our systems is the single most important priority for everyone at Enbridge.

“As we look forward in this year’s Strategic Plan, it’s clear that long-term global energy demand will continue to grow, and that all forms of energy supply – conventional and renewable – will be needed to meet that demand. Our scale, financial strength, and asset footprint across each of our businesses – Gas Transmission, Gas Distribution and Storage, Liquids Pipelines and Renewable Power – provide competitive advantages that assure the resiliency and longevity of our cash flows and will generate attractive long-term growth.

“For the 26th consecutive year, we’re pleased to be providing our shareholders with another dividend increase in 2021. This reflects our confidence in our healthy 5-7% DCF per share growth outlook, on average, through 2023 and beyond, the priority we place on returning capital to shareholders, and our strong financial position. We’ll continue to ratably grow the dividend up to the level of average annual DCF per share growth, while maintaining our dividend policy payout of 60-70% of distributable cash flow.

“We’re highly confident in the durability of our businesses and that they will generate profitable investment opportunities. Part of that is continuing to position for the gradual transition toward lower carbon intensity, over time. We began doing that more than 20 years ago with investments in natural gas and renewable power, which today provide leading platforms for lower carbon infrastructure growth. We’re also investing in renewable natural gas and hydrogen facilities with commercial models that fit our low-risk pipeline-utility model.

“In the near-term, our Plan continues to prioritize the execution of our $16 billion secured growth program, of which approximately $6 billion has already been spent, and are expected to deliver approximately $2 billion of incremental EBITDA from 2021 to 2023.

“The Line 3 Replacement project is an important element of that program. We recently completed a very thorough regulatory and permitting process in Minnesota that lasted 6 years. The majority of the line is in place and we’ve now started construction on the final leg in Minnesota. Our top priority will be to protect communities and the environment. We are very proud to have overwhelming community support for the project.

“We’ll be laser-focused on maximizing the returns on our base business by realizing embedded revenue growth and generating productivity improvements through the use of new technology. Our two technology and innovation labs, for example, are already helping our businesses enable significant revenue and cost efficiencies.

“Over the medium and longer term, Enbridge’s diversified asset base, integrated infrastructure networks and extensive reach provide us with many opportunities to invest our expected post- Line 3 annual investment capacity of $5-6 billion. We will, however, stay true to our investment discipline, deploy capital to the best uses, and stick to what we know best.

“That means prioritizing low-capital intensity growth and regulated utility or utility-like investments. Longer term, we will continue to develop our organic hopper; however, long-lead time opportunities will compete for excess financial capacity with alternatives, including share buybacks, to ensure shareholder value is maximized.

“Collectively, execution on these elements of our Plan are expected to drive 5-7% distributable cash flow per share growth through 2023 and beyond.

“Sustainability is integral to our ability to safely and reliably deliver the energy people need and want. While ESG has gained broader attention recently, we’ve always operated our business sustainably and we’re proud to be recognized as an ESG leader. Our recent further commitments to emissions reduction and diversity are a good example of that.

“We believe that our Plan continues to provide investors with a compelling and superior total shareholder return value proposition, which is why the management team and our employees continue to invest in ENB.”

Strategic Priorities and Three-Year Financial Outlook

Last year, Enbridge set out a strategic plan that emphasized maintaining resiliency and prudently growing its world-class energy infrastructure franchises, while preserving its financial strength and flexibility. The rapid rise of the Covid-19 pandemic in early 2020 and the unparalleled impact on energy supply and demand re-tested the resilience of the business.

Despite the disruption to energy markets, the strategic positioning of the Company’s assets and last mile connections to North America’s largest industrial, commercial and end-use markets, combined with Enbridge’s low-risk business model, have continued to generate consistent and predictable cash flows. Furthermore, precautionary measures were initiated early to further bolster the Company’s financial flexibility and to mitigate the financial impacts of the pandemic through prudent cost reductions.

As a result, Enbridge is even stronger today and is projected to achieve the mid-point of its 2020 financial guidance as set out in December 2019, further demonstrating its resilience.

The Company’s 2021 Strategic Plan builds on this strength and emphasizes priorities that will continue to reinforce the resilience, longevity and organic growth of its cash flows over the long-term. Specific priorities include:

  • Ensure safe and reliable operations and provision of effective and cost-efficient transportation solutions for its customers
  • Execute the $16 billion secured growth capital program, including completion of the U.S. segment of the Line 3 Replacement project
  • Maximize returns on the base business through embedded revenue growth, productivity enhancements and the application of technology to drive efficiency and improve returns
  • Grow core businesses through low capital intensity and utility-like investments, disciplined capital allocation, and preservation of balance sheet strength and flexibility

2021 Financial Outlook

Enbridge is providing 2021 guidance for EBITDA of $13.9 billion to $14.3 billion and distributable cash flow per share (DCF/share) of between $4.70 to $5.00 per share.

Performance drivers in 2021 include volume recoveries on Enbridge’s Liquids Mainline System and downstream pipelines; continued customer growth within its Gas Distribution & Storage business; rate increases on its Gas Transmission and Midstream systems; further cost savings; and contributions from projects entering service.

Separately, Enbridge announced that the quarterly dividend for 2021 will be increased from $0.81 to $0.835 per share, commencing with the dividend payable on March 1, 2021, to shareholders of record on February 12, 2021.

Business Updates

Line 3 Replacement

On December 1, Enbridge commenced construction on the Line 3 Replacement Project (the “Project”) in Minnesota, after having satisfied all necessary regulatory and permitting requirements at the state and federal levels. Appropriate measures have been put in place to ensure the health and safety of Enbridge’s workforce and the communities along the right of way.

The US$2.9 billion project is a critical integrity project that will enhance the continued safe and reliable operations of the Company’s Mainline System well into the future, reflecting Enbridge’s commitment to protecting the environment.

It will provide significant economic benefits for counties, small businesses, Native American communities, and union members – bringing 4,200 family-sustaining, mostly local construction jobs, millions of dollars in local spending and additional tax revenues at a time when Northern Minnesota needs it most.

The Company anticipates that the Project will be in service in the fourth quarter of 2021. The Company will provide an update on project costs in early 2021.

Atlantic Bridge

Regulators have approved the Weymouth Compressor Station, the final component of the US$0.1 billion Atlantic Bridge Project, to start operations.

The Atlantic Bridge Project will enable the transport of significant and diverse natural gas supplies to end use markets in the New England states and Canadian Maritime provinces. This expanded access to reliable and affordable natural gas throughout the region will support energy cost savings for homeowners, businesses, and manufacturers.

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