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Annual Investment Community Conference – Enbridge Inc.

Enbridge Inc. · Dec 11, 2018 · 89 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Annual Investment Community Conference – Enbridge Inc. – slide 1
  2. Annual Investment Community Conference – Enbridge Inc. – slide 2
  3. Annual Investment Community Conference – Enbridge Inc. – slide 3
  4. Annual Investment Community Conference – Enbridge Inc. – slide 4
  5. Annual Investment Community Conference – Enbridge Inc. – slide 5
    Highlights 2 2019 DCF guidance $4.30 - $4.60 per share 2019 dividend increase 10% DCF/share and DPS CAGR through 2020 10% Newly secured projects $1.8B Annual DCF/share growth rate post-2020 5-7% Liquids Pipelines Mainline •…
  6. Annual Investment Community Conference – Enbridge Inc. – slide 6
    2016 2018 EBITDA $6.9B $12.5B EBITDA by Business 20% Natural Gas 45% Natural Gas Total Assets by Geography 50% U.S. 60% U.S. Enbridge Transformation 3 Delivering North America’s Energy 25% of North America’s Crude Oil…
  7. Annual Investment Community Conference – Enbridge Inc. – slide 7
    Low Risk Business Model ~98% Regulated/Take or Pay/ Fixed Fee Low risk business model with highly predictable cash flows differentiates Enbridge from peers 2019e EBITDA Resiliency in All Market Conditions $0 $25 $50 $75 $100…
  8. Annual Investment Community Conference – Enbridge Inc. – slide 8
    Major 2018 Accomplishments 5 1. Deliver cash flow & dividend growth • Strong financial and operating performance • $7B projects brought into service 2. Move to pure regulated model • $7.8B of non-core asset sales 3. Accelerate…
  9. Annual Investment Community Conference – Enbridge Inc. – slide 9
    3 Core Businesses Driving Record Results • Excellent operating performance • $20B of projects placed into service (2017 & 2018) • Record pipeline demand - Liquids and Natural Gas • Strong, highly creditworthy customers 6 2017a…
  10. Annual Investment Community Conference – Enbridge Inc. – slide 10
    Longevity of Energy Infrastructure Source: International Energy Agency 7 North America well-positioned to meet global demand for decades N. America Demand & Supply N. America Demand & Supply Global Demand Global Demand Demand…
  11. Annual Investment Community Conference – Enbridge Inc. – slide 11
    Plan Priorities Continuing Priorities • Deliver strong cash flow and dividends • Pure pipeline-utility model • Strong balance sheet • Streamline, simplify the business • Extend growth Areas of Emphasis • Enhance core business…
  12. Annual Investment Community Conference – Enbridge Inc. – slide 12
    Gas Transmission – Strategic Growth Prospects • Rate cases • System modernization 9 $3B Secured projects in execution $2-3B per year future development opportunities post-2020 1-2% per year base business growth post-2020…
  13. Annual Investment Community Conference – Enbridge Inc. – slide 13
    Utilities– Strategic Growth Prospects • Amalgamation synergies • Cost management • Revenue escalators • Storage & transportation optimization 10 • Rate base additions driven by customer growth • Post-2020 customer additions •…
  14. Annual Investment Community Conference – Enbridge Inc. – slide 14
    Liquids Pipelines – Strategic Growth Prospects • Mainline toll framework • Throughput optimization • Toll indexing • Efficiency & productivity 11 • Line 3 replacement • Southern Access Expansion • AOC lateral (new) • Gray Oak…
  15. Annual Investment Community Conference – Enbridge Inc. – slide 15
    Self Funding & Capital Allocation - Context 12 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 2014 2020e $5.00 No further common equity issuance 0 1,000 2,000 2014 2019e 2020+ Organic Growth…
  16. Annual Investment Community Conference – Enbridge Inc. – slide 16
    Capital Available to Invest - 2020 & Beyond 13 $0 $6 $12 Cash Flow from Operations Free Cash Flow Available Capital Dividends Maintenance Capital Debt Capacity $5-6B
  17. Annual Investment Community Conference – Enbridge Inc. – slide 17
    Capital Allocation Framework 14 Optimize capital deployment within financial policy constraints to maximize long-term shareholder value Choices Financial Policy Filter Value Drivers Growth Rate | ROCE | Credit Metrics Project Level…
  18. Annual Investment Community Conference – Enbridge Inc. – slide 18
  19. Annual Investment Community Conference – Enbridge Inc. – slide 19
    Growth Outlook • Strong organic growth opportunities from 3 core businesses • Low risk business model • Self funded equity • Prudent leverage levels • Disciplined capital allocation 16 Annual DCF/share growth of 10% through 2020,…
  20. Annual Investment Community Conference – Enbridge Inc. – slide 20
    Focus on Energy Sustainability • Energy demand growth decoupled from GDP • Reduced emissions to below 1992 levels (U.S.) • Oilsands lowered intensity by 21% • Demand management programs reduce consumption, emissions • Renewable…
  21. Annual Investment Community Conference – Enbridge Inc. – slide 21
  22. Annual Investment Community Conference – Enbridge Inc. – slide 22
  23. Annual Investment Community Conference – Enbridge Inc. – slide 23
  24. Annual Investment Community Conference – Enbridge Inc. – slide 24
    Premier Gas Transmission Footprint 2 2018 Accomplishments • Placed 11 projects into service valued at ~$6B, including NEXUS and Valley Crossing • ~98% contract renewal rate • Filed Texas Eastern rate case • Focused on core U.S.…
  25. Annual Investment Community Conference – Enbridge Inc. – slide 25
    Natural Gas Demand is Growing & Diversified 3 N. Gas Demand Growth by Region (Bcf/d increases by 2035) N. Gas Demand by Sector (N. America, Bcf/d) E. Canada +0.6 W. Canada +2.5 Rockies +1.3 West Coast +0.4 Midwest +2.8…
  26. Annual Investment Community Conference – Enbridge Inc. – slide 26
    Growing LNG Demand Presents Opportunity 4 Sources: WoodMac, IHS, EIA, Enbridge research 2015 2020 2025 2030 Global LNG Demand (Bcf/d) Global Liquefaction Capacity (Bcf/d) Global LNG demand expected to grow to ~65Bcf/d through…
  27. Annual Investment Community Conference – Enbridge Inc. – slide 27
  28. Annual Investment Community Conference – Enbridge Inc. – slide 28
  29. Annual Investment Community Conference – Enbridge Inc. – slide 29
    Optimizing the Base – Rate Base Growth Key Drivers: • Growth in system net plant value • Realignment of the depreciation rate/ negative salvage • System maintenance and modernization increases in the U.S. and Canada 7 Texas…
  30. Annual Investment Community Conference – Enbridge Inc. – slide 30
    Robust Portfolio of Secured Growth Projects 8 ~$3B in execution 2019+ $6B+ in service 2018 Valley Crossing NEXUS PennEast TEAL T-South High Pine Wyndwood Spruce Ridge RAM Pomelo Gulf Coast Express Atlantic Bridge…
  31. Annual Investment Community Conference – Enbridge Inc. – slide 31
    Well-positioned for Future Growth 9 $2-3B per year in opportunities post 2020 Western Canada Southeast Markets Gulf Coast Markets Northeast & New England Our assets have the first & last mile advantage
  32. Annual Investment Community Conference – Enbridge Inc. – slide 32
    Northeast & New England 10 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…
  33. Annual Investment Community Conference – Enbridge Inc. – slide 33
    Southeast Markets 11 Southeast Markets • Generating capacity in Florida is expected to grow by 15+% by 2026 • Majority of this growth is projected to be natural gas-fired generation Continued growth in natural gas fired power…
  34. Annual Investment Community Conference – Enbridge Inc. – slide 34
    Gulf Coast Markets 12 Exports to Gulf Coast & Mexico •Texas Eastern, Brazoria Interconnector Gas and Valley Crossing assets well connected to deliver to Gulf Coast LNG and Mexico markets Permian • Expanding Permian supply pushing…
  35. Annual Investment Community Conference – Enbridge Inc. – slide 35
    Western Canada 13 Western Canada • Growing supply presents many infrastructure opportunities to support Montney and Duvernay: ? Pipeline expansions: T-North, T-South, Alliance ? NGL infrastructure solutions ? Greenfield LNG…
  36. Annual Investment Community Conference – Enbridge Inc. – slide 36
    Gas Transmission – Summary • Rate cases • System modernization 14 $3B Secured projects in execution $2-3B per year in future development opportunities post-2020 1-2% per year base business growth post-2020 • T-South…
  37. Annual Investment Community Conference – Enbridge Inc. – slide 37
  38. Annual Investment Community Conference – Enbridge Inc. – slide 38
    Our Premium Utility Tier 1 North American Gas Utility • Largest volume and fastest growing franchise – 12+ million people and businesses – 3.7 million meters – 50,000+ annual customer additions • Investing $1+ B capital per year…
  39. Annual Investment Community Conference – Enbridge Inc. – slide 39
  40. Annual Investment Community Conference – Enbridge Inc. – slide 40
    Focus on Amalgamation Incentive mechanism enhances earnings • Day One benefits • Five year O&M synergy capture • Low capital investments to achieve O&M savings • Inflation protection • Retain 150 bps of earnings above regulated ROE…
  41. Annual Investment Community Conference – Enbridge Inc. – slide 41
    Amalgamation Benefits Low risk earnings growth • Benefits accrue immediately to Enbridge Amalgamation activities underway • Integration has already commenced • Common enterprise platforms Major synergy capture areas • Operations &…
  42. Annual Investment Community Conference – Enbridge Inc. – slide 42
    Organic Growth in Rate Base • Utility Growth – 50,000 new customer additions annually – Over 50 new expansion communities • Maintenance/Renewal – Execution of an optimized asset plan – Continued investment for safe and reliable…
  43. Annual Investment Community Conference – Enbridge Inc. – slide 43
    Expansion of Dawn Hub and Transmission Successful track record of phased growth of transmission system • 3 year 1.2 Bcf expansion delivered on time/budget • New 2021/22 Expansion Open Season positively received by Ontario and US NE…
  44. Annual Investment Community Conference – Enbridge Inc. – slide 44
  45. Annual Investment Community Conference – Enbridge Inc. – slide 45
    Utilities - Summary 9 TORONTO OTTAWA DAWN HUB ONTARIO • Largest and fastest growing gas utility franchise in North America • Steady annual growth opportunities through new customer additions and system expansions • Amalgamation…
  46. Annual Investment Community Conference – Enbridge Inc. – slide 46
  47. Annual Investment Community Conference – Enbridge Inc. – slide 47
    Excellent Foundation for Continued Growth 2 • Connected to 9 MMbpd of downstream refining capacity • Well positioned to expand USGC export infrastructure • Oil sands pipelines provide ~2MMb/d of capacity into Alberta Hubs…
  48. Annual Investment Community Conference – Enbridge Inc. – slide 48
    WCSB Fundamentals 3 Source: CAPP 2018 WCSB Oil Supply (kbpd) Producers Focusing on Cost Efficiency and Technology Supply is expected to grow sustainably with deployment of new technology that lowers costs and emissions CAPP 2018…
  49. Annual Investment Community Conference – Enbridge Inc. – slide 49
    North American Crude Export Fundamentals 4 Sources: EIA, IEA Current Exports Tight Oil Increase Demand Increase 2025 Exports U.S. Export Growth (MMb/d) Current Exports ~2 MMb/d USGC is the Refining/Export Epicenter >8.5…
  50. Annual Investment Community Conference – Enbridge Inc. – slide 50
    Increasing Mainline Throughput 2015 2018 +230 +120 +100 Capacity Expansion Capacity Recovery Optimization
  51. Annual Investment Community Conference – Enbridge Inc. – slide 51
    Mainline Positioning & Competitiveness 7 Strong Demand from Premium Markets - 1,000 2,000 3,000 4,000 5,000 6,000 2018 2022 2026 2030 Enbridge Mainline Contracted Capacity Western Canada Demand 3rd Party Spot CAPP 2018…
  52. Annual Investment Community Conference – Enbridge Inc. – slide 52
  53. Annual Investment Community Conference – Enbridge Inc. – slide 53
  54. Annual Investment Community Conference – Enbridge Inc. – slide 54
  55. Annual Investment Community Conference – Enbridge Inc. – slide 55
    Additional Mainline Optimizations 2019 Bakken Pipeline (BPEP) Delivery Reduction • Reduce deliveries into Cromer to increase available capacity for WCSB egress (Q3) Line 3 Replacement – Canada • Begin line-fill and terminal…
  56. Annual Investment Community Conference – Enbridge Inc. – slide 56
    Line 3 Replacement • Canadian construction program well underway – over 80% of pipeline laid – Expected completion – July 1, 2019 • Wisconsin segment complete and in-service • Regulatory and permitting activities progressing well in…
  57. Annual Investment Community Conference – Enbridge Inc. – slide 57
    Southern Access Expansion • Line 3 Replacement increases capacity into Superior by 370kbpd • Southern Access will be expanded by 300kbpd to 1.2MMbpd • Project is fully permitted and execution is already well progressed • 2H 2019…
  58. Annual Investment Community Conference – Enbridge Inc. – slide 58
    Mainline Optimizations 2020 Bakken Pipeline (BPEP) Idle • Idle pipeline to free up the remaining capacity for WCSB egress System Optimization • Crude slates/DRA Line 4 Restoration • Terminal and scheduling optimization to restore…
  59. Annual Investment Community Conference – Enbridge Inc. – slide 59
    Mainline System – Potential Growth • Condensate supply /demand fundamentals in WCSB expected to reduce requirement for imported supply • Developing commercial proposal to reverse the line and place into light crude service • Limited,…
  60. Annual Investment Community Conference – Enbridge Inc. – slide 60
    Additional Throughput Planned & Achievable 2015 2018 2023 +370 +300 L3 Replacement Capacity System Optimizations & Enhancements +150 Souther Ex-WCSB Egress
  61. Annual Investment Community Conference – Enbridge Inc. – slide 61
    Market Access - Potential Growth • Mainline optimizations provide an opportunity to increase market access pipelines by 350kbpd – Flanagan South expansion of 250kbpd along with corresponding Seaway expansion – Southern Access…
  62. Annual Investment Community Conference – Enbridge Inc. – slide 62
    Express Pipeline – Potential Growth • DRA/Pump station program expected to increase capacity up to 60kbpd • Potential ISD – Late 2019 • Range of market access options – Increased local demand – Wood River – Cushing – Rail markets…
  63. Annual Investment Community Conference – Enbridge Inc. – slide 63
    Regional Pipelines - Secured Growth AOC Lateral Acquisition • Acquisition of lateral pipelines and tankage supporting AOC’s Leismer SAGD oil sands asset • Long term take-or-pay agreement – Current shipper on Enbridge trunkline –…
  64. Annual Investment Community Conference – Enbridge Inc. – slide 64
    Regional Pipelines – Potential Growth 19 BAKKEN DAPL Patoka • Oil sands development will continue to drive need for regional infrastructure to support growth • Trunkline expansion potential – Athabasca, Woodland, Wood Buffalo •…
  65. Annual Investment Community Conference – Enbridge Inc. – slide 65
    USGC – Refinery Access and Export Strategy Portfolio additions provide the foundation for future growth – Pipeline capacity of 2.3 MMbpd serving the region – Export capability ? Seaway Docks ? VLCC loading opportunity –…
  66. Annual Investment Community Conference – Enbridge Inc. – slide 66
    USGC - Secured Growth 21 Gray Oak Pipeline • 22.8% joint venture interest • Partners include P66 and Marathon • Crude oil transportation from the Permian and Eagle Ford basins to destinations in Corpus Christi and Freeport •…
  67. Annual Investment Community Conference – Enbridge Inc. – slide 67
    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 • Strong…
  68. Annual Investment Community Conference – Enbridge Inc. – slide 68
  69. Annual Investment Community Conference – Enbridge Inc. – slide 69
    Liquids Pipelines - Summary • Mainline toll framework • Throughput optimization • Toll indexing • Efficiency & productivity 24 $11B Secured projects in execution ~$2B per year future development opportunities post-2020 2-3%…
  70. Annual Investment Community Conference – Enbridge Inc. – slide 70
  71. Annual Investment Community Conference – Enbridge Inc. – slide 71
    2018 Recap 2 Long-term Capital Raising – ~$8.3B since December 1, 2017 Asset Sales – $7.8B of asset sales announced in 2018; – $5.7B closed to date Business Risk Reduction – Sale of G&P businesses Leverage Reduction – Ahead of…
  72. Annual Investment Community Conference – Enbridge Inc. – slide 72
  73. Annual Investment Community Conference – Enbridge Inc. – slide 73
    Our Low Risk Business Model 4 Commercial Foundation Business Risk Assessment Scale S&P3 Excellent Moody’s4 A 2% 98% TOP / COS / Fixed Fee/CTS 7% 93% Investment Grade Take-or-Pay / Cost-of-service Fixed Fee Competitive Tolling…
  74. Annual Investment Community Conference – Enbridge Inc. – slide 74
    Our Low Risk Business Model Hedging Controllable Risks FX - Cash Flow Basis FX - Earnings Basis (1) Cash flow at risk measures the maximum cash flow loss that could result from adverse Market Price movements over a specified time…
  75. Annual Investment Community Conference – Enbridge Inc. – slide 75
    Highly predictable financial performance EPS guidance range Actual results DCF/share guidance range $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 2008 2009 2010 2011 2012 2013 2014 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00…
  76. Annual Investment Community Conference – Enbridge Inc. – slide 76
    Financial Strength & Flexibility 7 Consolidated DEBT to EBITDA1 Standard & Poors BBB+ stable Fitch BBB+ stable DBRS BBB High stable Moody’s Baa3 positive Enbridge Inc. Sr. Unsecured Debt Ratings2 0.0x 1.0x 2.0x 3.0x 4.0x…
  77. Annual Investment Community Conference – Enbridge Inc. – slide 77
    Simplification and Optimization Sponsored Vehicle Buy-ins • Eliminates complexity • Enhances earnings and cash flow transparency • Increases cash flow to Enbridge - parent company • Reduces consolidated payout • Increases…
  78. Annual Investment Community Conference – Enbridge Inc. – slide 78
    Simplification and Optimization • Discontinuation of issuance by intermediate HoldCos - EIF, SEP, EEP, Westcoast, SE Capital • Enbridge Income Fund exchange of senior term notes • Cross guarantees of Enbridge Inc. senior term notes…
  79. Annual Investment Community Conference – Enbridge Inc. – slide 79
    Long-term Financial Planning Parameters 10 (1) Trailing twelve-month as at September 30, 2018. (2) Calculated based on Factset Enbridge 2018e consensus .(3) Management projection. Metric Long-term Targets Current Position Credit…
  80. Annual Investment Community Conference – Enbridge Inc. – slide 80
    Enterprise-wide Secured Growth Project Inventory Segments: Liquids Pipelines Gas Transmission & Midstream Gas Distribution Green Power & Transmission Project Expected ISD Capital ($B) 2019 Stratton Ridge 1H19 0.2 USD Hohe See Wind &…
  81. Annual Investment Community Conference – Enbridge Inc. – slide 81
    Financial Outlook 2019 Consolidated EBITDA guidance 2019 EBITDA Guidance 2019e ($MM) Growth Drivers: 2019e vs 2018 Liquids Pipelines ~6,800 + Line 3 – Nov 1 ISD + Higher Bakken Pipeline volumes Gas Transmission & Midstream ~4,000 +…
  82. Annual Investment Community Conference – Enbridge Inc. – slide 82
    Financial Outlook Distributable Cash Flow (DCF) 2019e 2020e 13 ($MM, except per share amounts) 2019 Guidance 2020 Guidance Adjusted EBITDA1 ~$13,000 ~$14,800 Maintenance capital ~(1,200) ~(1,200) Current income taxes2 ~(400)…
  83. Annual Investment Community Conference – Enbridge Inc. – slide 83
    Financial Outlook 2019 Illustrative Quarterly Profile Consolidated Adj. EBITDA (% of Full Year Projection) 2019e Quarterly Drivers • Seasonality of businesses ? Gas utility ? Interruptible gas and storage service ? Renewables •…
  84. Annual Investment Community Conference – Enbridge Inc. – slide 84
    Dimensioning Organic Growth Potential 15 2020 and beyond Potential Opportunity Set Expected Investment Opportunity (probability weighted) Target Core Growth Portfolio ~$5-6B Annual Average Utilities Natural Gas Liquids…
  85. Annual Investment Community Conference – Enbridge Inc. – slide 85
    Illustrative Self-funded Growth Potential 16 (1) Incremental DCF = incremental EBITDA, less estimated incremental interest expense, maintenance capital and current income taxes Representative year post-2020 ($MM) Free cash flows after…
  86. Annual Investment Community Conference – Enbridge Inc. – slide 86
    Longer-term Financial Outlook • Embedded Growth: 1-2% – Indexed tolls – Volume ramp-up – Efficiency gains • Self-funded investment: 4-5% – $5-6B of capital annually 17 2017 2018e 2019e 2020e 2021+ Consolidated DCF/share $4.15-…
  87. Annual Investment Community Conference – Enbridge Inc. – slide 87
    Enbridge’s Value Proposition 2 • Leading energy infrastructure position • Low-risk pure regulated business model • Strong investment grade credit profile • 10% DCF and dividend through 2020 • 5-7% DCF growth beyond 2020
  88. Annual Investment Community Conference – Enbridge Inc. – slide 88
  89. Annual Investment Community Conference – Enbridge Inc. – slide 89
    Enbridge’s Value Proposition 2 • Leading energy infrastructure position • Low-risk pure regulated business model • Strong investment grade credit profile • 10% DCF and dividend through 2020 • 5-7% DCF growth beyond 2020

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