Slide 1: Enbridge: A North American Infrastructure Leader
Enbridge: Presentation A North American Infrastructure Leader Al Monaco Al Monaco President & CEO, Enbridge Inc.
Slide 2: Legal Notice
Legal Notice This presentation includes certain forward looking statements and information (FLI) to provide shareholders of Enbridge Inc. (“Enbridge” or the “Company”) and Enbridge Income Fund Holdings Inc. (“ENF”) and potential investors with information about Enbridge, ENF and their respective sub
Slide 3: Premier North American Infrastructure Footprint
Premier North American Infrastructure Footprint • Best in class assets • Superior growth outlook • Low risk commercial model • Execution expertise • Strong financial position 2017e EBITDA by Segment Liquids Gas Transportation 34% Transportation 47% 17% Gas Distribution Utilities SLIDE 3
Slide 4: Strong Global Energy Fundamentals
Strong Global Energy Fundamentals Global Energy Demand by Region Global Energy Supply Mix (million tonnes of oil equivalent) (million tonnes of oil equivalent) 20 6 2040 2014 15 Non-OECD Other 4 10 Non-OECD Asia 2 5 OECD 0 0 2014 2020 2025 2030 2035 2040 Oil Coal Gas Bioenergy Nuclear Hydro Renewabl
Slide 5: Positive Natural Gas Fundamentals
Positive Natural Gas Fundamentals Global Gas Demand • Rising demand 6 (Thousand BCM) • Abundant, low cost supply 5 • Lower energy costs 4 3 • Ideal for power generation 2 • Reduced carbon intensity 1 0 2014 Power Industry Buildings Transport Other 2040 Source: 2016 IEA World Energy Outlook, New Poli
Slide 6: The Need for Infrastructure
The Need for Infrastructure Sources: Wood Mackenzie, EIA, SNL Fix regional price dislocations and connect to export markets SLIDE 6
Slide 7: ENB Investor Value Proposition
ENB Investor Value Proposition Superior Total Shareholder Return % Growth ENB Dividend Growth $ Low Risk Steady & Business Growing Model Income Our value proposition and business model have delivered superior value to shareholders SLIDE 7
Slide 8: Superior Growth
Superior Growth 6 strategic platforms World’s largest and most complex North North Strategically located to serve liquids pipelines system, American American demand pull markets, transporting ~60% of US crude Liquids Gas transporting ~20% of North imports from Canada Pipelines Pipelines America’s na
Slide 9: Superior Growth: Secured project inventory
Superior Growth Secured project inventory 2017 – 2019 In Service Dates (C$ billions) Project Expected ISD Capital Regional Oil Sands Optimization In service $1.3B (Athabasca Twin) Norlite 1H 2017 $0.9B1 $27 Bakken Pipeline System 1H 2017 $1.9B Regional Oil Sands Optimization $23 (Wood Buffalo Extens
Slide 10: Superior Growth: Probability weighted project inventory
Superior Growth Probability weighted project inventory (C$ billions) Components of Risked Capital – De-bottlenecking liquids pipelines / market access North Renewable American – Northeast gas pipelines expansion / extension Power Liquids Pipelines – Southeast gas pipeline capacity – Gas pipelines fo
Slide 11: Low Risk Business Model
Low Risk Business Model Commercial Terms Limited Commodity Price Risk Investment Grade Customers 96% of cash flow underpinned <5% of combined EBITDA is 93% of revenue from by long term commercial agreements commodity price exposed investment grade or equivalent (Take-or-pay or equivalent contracts)
Slide 12: Steady and Growing Income
Steady and Growing Income – 15% dividend increase in 2017 – 10-12% annual dividend growth from 2018 through 2024 – Conservative ACFFO payout ratio of 50-60% 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E Premium dividend growth with conservative payout ratio SLIDE 12
Slide 13: Balance Sheet Strength
Balance Sheet Strength – Committed to strong investment grade credit rating – Significant size, scale and asset diversity supports credit profile – Debt/EBITDA naturally improves as high quality projects under construction are placed into service Key Credit Metrics and Targets Projected Pro Forma De
Slide 14: Sponsored Vehicles Considerations
Sponsored Vehicles Considerations Key Issues – MLP structures generally – Effectiveness of sponsored vehicles – Structural complexity VEHICLE ACTIONS STATUS TIMING DCP/DPM Restructuring Complete Q1 2017 MEP Privatization In Progress Q2 2017 EEP Joint Funding Complete Q1 2017 EEP Strategic Review In
Slide 15: Investor Outreach Plan
Investor Outreach Plan Fulsome information updates through 2017 Second Quarter 2017 Fourth Quarter 2017 • Q1 Results (May 11) • Enbridge Days investor - Dividend true-up conference (Dec) - 2017 guidance - Roll-out of strategic plan - 2018 guidance • “Interim” investor - Long term outlook conference
Slide 16: Global "must own" investment
Global “must own” investment • $165B enterprise value • Highest quality liquids and natural gas franchises • Low risk business model • Strong balance sheet and access to capital • $27B secured growth program • 12-14% CAGR ACFFO/share growth (2014-2019) • $48B development project pipeline driving 10-
Slide 17: Q&A
Q&A
Slide 18: Liquids Pipelines
Liquids Pipelines Guy Jarvis EVP & President Liquids Pipelines
Slide 19: Liquids Pipelines System Overview
Liquids Pipelines System Overview • World class liquids infrastructure spanning North America • Serves two high quality producing basins • Provides access to the best markets • Offers unparalleled terminal and operational flexibility • Competitive and stable tolls SLIDE 2
Slide 20: Financial Results
Financial Results ADJUSTED EBIT (Millions of Canadian dollars) 2015 2016 Canadian Mainline 896 931 Lakehead System 1,108 1,425 Mid-Continent and Gulf Coast 516 656 Express-Platte System1 323 275 Regional Oil Sands System 341 384 Bakken System 213 198 Feeder Pipelines and Other 155 196 Southern Light
Slide 21: Fundamentals – WCSB/Bakken Region
Fundamentals – WCSB/Bakken Region WCSB Supply Outlook North Dakota and Eastern Montana Crude 6 (MMbpd) Production Forecast (MMbpd) 5 4 1.5 3 1.0 2 0.5 1 0.0 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 CAPP June 2016 Crude Production
Slide 22: Oil Sands
Oil Sands • Established footprint in the region with optionality to Edmonton or Hardisty • Current throughput capacity into Edmonton & Hardisty hubs ~2MMbpd • Unparalleled gathering system that connects WCSB crude oil with transportation access to valuable markets • 9 connected Oil Sands projects SL
Slide 23: Oil Sands – Secured Growth
Oil Sands – Secured Growth ❶ Athabasca Pipeline Twin & Expansion ❷ Wood Buffalo Extension • Wood Buffalo Extension/Athabasca Pipeline Twin ❸ Norlite Diluent Pipeline ❹ JACOS Lateral • Capital: $2.6B (WBE - $1.3B, APT - $1.3B) • Athabasca Pipeline Twin in service • Wood Buffalo Extension in service b
Slide 24: Oil Sands – Strategic and Competitive Position
Oil Sands – Strategic and Competitive Position Commercial Structure Financial Modelling Considerations • Long term “Take or Pay” agreements in place • Stable cash flows • Majority modelled on a capital cost multiplier • Growth tied to: basis or Cost of Service • Capital additions • Power costs colle
Slide 25: Mainline
Mainline • Comprised of Canadian Mainline and Lakehead System in the United States • Largest, longest and most complex petroleum pipeline system in the world • Combined annual operating capacity of approximately 2.85 MMbpd • Ex-Gretna record deliveries averaged 2.645 MMbpd in January 2017 • Accounte
Slide 26: Mainline – Secured Growth
Mainline – Secured Growth Line 3 Replacement • Restores line capacity to 760 kbpd • Expected In-Service: 2019 • Capital: $7.5B • 15 year toll surcharge • Solid return on significant incremental investment Southern Access Expansion • Expands line capacity to 1,200 kbpd • Expected In-Service: 2019 • C
Slide 27: Mainline – Commercial Model
Mainline – Commercial Model Competitive Tolling Settlement (“CTS”) Tolling Methodology • 10 Year Agreement • Shippers pay International Joint Tariff (“IJT”) • Provides substantial toll certainty for • IJT escalates on July 1st each year by 75% shippers and incentive for Enbridge to of Canadian GDPP
Slide 28: Mainline – Commercial Model
Mainline – Commercial Model Tolls & Deliveries Canadian Mainline Earnings $120 800 2011 Competitive Toll $6.00 3,000 Settlement goes into 700 $100 effect July 1, 2011 2,500 600 $4.50 2005 $80 (Millions of Canadian Dollars) ITS extended 500 2,000 Other Existing Pipelines through to 2009 $60 400 $3.00
Slide 29: Market Access
Market Access • Long term “Take or Pay” agreements in place • Commercial structures provide revenue certainty to Enbridge over the term of the contracts Line 9 – 300 KBPD • International Joint Tariffs provide incentivized long-haul service from the Enbridge Mainline to downstream markets SAX – 300 K
Slide 30: Mainline – Strategic and Competitive Position
Mainline – Strategic and Competitive Position ❶Production growth with limited alternative takeaway capacity ❷ Highly competitive tolls into key USGC markets Receipt and Pipeline/Rail Range (per bbl) Delivery Enbridge Hardisty to $6.93 to $8.79 Mainline/FSP USGC Keystone XL Hardisty to Houston ??? ❸
Slide 31: Mainline – Positioning for the Future
Mainline – Positioning for the Future 7,000 2016 CAPP 2016 CAPP Production Production 6,000 Forecast Forecast +10%* 3rd Party New Build 5,000 Enbridge Staged Expansions Enbridge Line 3 Replacement 4,000 000's bbl Western Canada Enbridge Demand + Existing 3,000 System Infrastructure Optimizations 2,0
Slide 32: Bakken Region
Bakken Region • Extensive infrastructure accommodates current and planned growth • North Dakota System (210 kbpd) & Bakken Expansion Pipeline (150 kbpd) combined for total current system capacity of 360 kbpd • Gathers crude from North Dakota and delivers to Enbridge Mainline which provides unparalle
Slide 33: North Dakota System – Strategic and Competitive Position
North Dakota System – Strategic and Competitive Position Commercial Structure Financial Modelling Considerations • North Dakota System: Common Carrier with • Stable results and utilization of Classic System indexed rates • Phase V and VI surcharge expired in 2015 • Bakken Expansion Pipeline: 5 & 10
Slide 34: DAPL – Strategic and Competitive Position
DAPL – Strategic and Competitive Position Commercial Structure Financial Modelling Considerations • 90 % contracted with “Take or Pay” agreements • $1.5B USD Cash Purchase Price; Assumed $0.7B in place USD in project debt • Local tariff on DAPL to Patoka, Illinois • In Service: Q2 2017 • Joint tarif
Slide 35: Express/Platte
Express/Platte Complimentary system presents connectivity opportunity for enhanced service offering Express Pipeline • Hardisty - Casper • Annual capacity of 280 kbpd • Uniquely situated pipeline for import of growing Canadian crude supply • Stable, secure fee-for-service revenue Platte Pipeline • C
Slide 36: Express/Platte – Strategic and Competitive Position
Express/Platte – Strategic and Competitive Position Commercial Structure Financial Modelling Considerations Express • Contracted toll escalation on Express • 90% contracted • Majority of contracts 5-20 year terms • Platte tolls subject to FERC escalator • High credit quality customers • Legacy Expre
Slide 37: Unmatched Liquids Transportation System
Unmatched Liquids Transportation System • Unparalleled mainline flexibility and market access • Highly executable, low cost staged expansions • Competitive tolls and operationally reliable system Other Existing Pipelines • Positioned to capture growth in growing basins Western Canadian Refineries •
Slide 38: Finance
Finance John Whelen EVP & Chief Financial Officer
Slide 39: Finance Practices at Enbridge
Finance Practices at Enbridge • Financial strength and flexibility • Strong, investment grade credit ratings • Ample liquidity for contingencies • Rigorous risk management • Low risk commercial structures • Proactive management of residual risks • Disciplined investment process • Strict investment c
Slide 40: Financial Strength and Flexibility
Financial Strength and Flexibility Financial planning parameters reflect a commitment to balance sheet strength Metric Target Consolidated Pro Forma Debt to EBITDA End of year Credit Policy Strong, Investment Grade Dividend Payout 50-60% ACFFO 6.2x 5.5x FFO / Debt ≥15% 5.0x 5.1x Debt / EBITDA ≤5.0x
Slide 41: Financial Strength and Flexibility
Financial Strength and Flexibility Demonstrated access to capital. Ample liquidity to support post merger business plan Enbridge Financing Execution Committed Credit Facilities 20164 2017 ($ Billions CAD) $ Billions (CAD) 3 Equity Funding1 ENB Common Shares 2.3 - $30B ENF Common Shares 0.6 - ENB/ENF
Slide 42: Financial Strength and Flexibility
Financial Strength and Flexibility Secured capital program can be readily financed through internal cash flow and alternative sources of equity capital Enbridge Group Funding Requirements Ample sources of alternative equity financing 2017e – 2019e 2017-2019 • $9B of alternative sources of equity cap
Slide 43: Rigorous Risk Management
Rigorous Risk Management Combination further diversifies exposure and strengthens business risk profile Business Mix Investment Grade Customers Limited Commodity Price Risk 96% of cash flow underpinned 93%2 of revenue from <5% of combined by long term commercial investment grade or EBITDA is commodi
Slide 44: Disciplined Investment Process
Disciplined Investment Process Rigorous project evaluation and capital allocation process
Slide 45: Sponsored Vehicles Considerations
Sponsored Vehicles Considerations Key Issues – MLP structures generally – Effectiveness of sponsored vehicles – Structural complexity VEHICLE ACTIONS STATUS TIMING DCP/DPM Restructuring Complete Q1 2017 MEP Privatization In Progress Q2 2017 EEP Joint Funding Complete Q1 2017 EEP Strategic Review In
Slide 46: Appendix
Appendix
Slide 47: Investor Relations Principles
Investor Relations Principles Committed to “Best in Class” practices Guiding Principles Investor Relations Contacts • Knowledgeable Enbridge Inc. Jonathan Gould • Responsive 403-231-3916 Jonathan.gould@enbridge.com • Accessible Spectra Energy Partners Roni Cappadonna • Transparent 713-627-4778 Roni.
Slide 48: Financial Results – Enbridge
Financial Results – Enbridge ADJUSTED EBIT (Millions of Canadian dollars) 2014 2015 2016 Liquids Pipelines 2,592 3,384 3,958 Gas Distribution 391 446 494 Gas Pipelines and Processing 293 336 366 Green Power and Transmission 151 175 165 Energy Services 42 61 28 Eliminations and Other (60) (246) (349)
Slide 49: Consolidated Financial Results – Enbridge
Consolidated Financial Results – Enbridge (Millions of Canadian dollars, except share information and per share amounts) 2014 2015 2016 Consolidated Adjusted EBIT* 3,409 4,156 4,662 Depreciation and amortization 1,577 2,024 2,240 Maintenance capital (970) (720) (671) Interest expense (926) (1,273) (
Slide 50: Post Combination Segmented Reporting
Post Combination Segmented Reporting Liquids Pipelines Segment Line of Business Key Assets Ownership Canadian Mainline Canadian portion of Mainline System; Line 9 Fund Group Enbridge Energy Lakehead System U.S. portion of Mainline System Partners, L.P. Athabasca Mainline; Waupisoo Pipeline; Woodland
Slide 51: Post Combination Segmented Reporting
Post Combination Segmented Reporting Gas Pipelines & Processing Segment Line of Business Key Assets Ownership Algonquin Gas Transmission, Big Sandy Pipeline, Bobcat Gas Storage, East Tennessee Natural Gas, Market Hub Partners , Ozark Gas Transmission, Saltville Gas Spectra Energy U.S. Transmission S