Slide 1: Fourth Quarter 2017 Financial Results and Business Update
Fourth Quarter 2017 Financial Results and Business Update February 16, 2018 Al Monaco, Chief Executive Officer | John Whelen, Chief Financial Officer
Slide 2: Legal Notice
Legal Notice Forward Looking Information This presentation includes certain forward looking statements and information (FLI) to provide potential investors, shareholders and unitholders of Enbridge Inc. (Enbridge or the Company), Enbridge Income Fund Holdings Inc. (ENF), Enbridge Energy Partners, L.
Slide 3: Agenda
Agenda • 2017 Recap • Strategic & Business Update • Financial Results Review • 2018 Priorities Line 3 Replacement 3
Slide 4: 2017 Recap
2017 Recap Closed Spectra acquisition Achieved Year 1 synergy target $12B projects put in service Raised $14B+ of capital Strong operational and safety performance Achieved DCF/ share within guidance range ($3.68/share) Strengthened sponsored vehicles: EEP, DCP, SEP Established new 3-year plan and s
Slide 5: 2018 – 2020 Strategic Priorities
2018 – 2020 Strategic Priorities 1. Move to pure regulated pipelines/utility model – Focus on crown jewel businesses – De-emphasize, sell, monetize non-core assets 2. Accelerate de-leveraging – 5.0x Debt/EBITDA by end of 2018 3. Deliver premium cash flow & dividend growth – 10% DCF and dividend CAGR
Slide 6: Economic Environment
Economic Environment • Positive energy fundamentals Interest Rates – Robust WCSB supply outlook Fixed Rate / Total Debt2 ~85% – Rising North American demand 2018 Planned term debt ~65% hedge position • Tax reform 2018 Interest rate sensitivity Budget Assumption DCF/ Share – Immaterial impact to DCF
Slide 7: Mainline Performance and 2018 Outlook
Mainline Performance and 2018 Outlook Dec 2017: Average Mainline Throughput 2,733kbpd 3,000 Effective Annual • Since 2014, expansions and optimization have Ex-Gretna Deliveries (KBPD) 2,500 Capacity Budget added significant capacity 2,530 2,405 ~2,650 2,000 2,185 • Upstream customer disruptions impa
Slide 8: Mainline Competitive Positioning beyond 2020
Mainline Competitive Positioning beyond 2020 • Mainline attributes: – Market reach 1.9 mmbpd – Highly competitive tolls – Operating flexibility Sole sourced supply Chicago Netback • WCSB production growth outlook remains strong Chicago Pricing* $53 Enbridge Toll** ($5.50) • Mainline directly connect
Slide 9: Projects Brought into Service in 2017
Projects Brought into Service in 2017 Project ISD Capital ($B) Regional Oil Sands Optimization – Athabasca Twin 1Q17 1.3 CAD Jackfish Lake 1Q17 0.2 CAD Norlite 2Q17 0.9 CAD Bakken Pipeline System 2Q17 1.5 USD Sabal Trail 2Q17 1.6 USD Segments: Gulf Markets – Phase 2 2Q17 0.1 USD Liquids Pipelines Ch
Slide 10: Enterprise-wide Secured Growth Projects
Enterprise-wide Secured Growth Projects Capital Capital Project Expected ISD (C$B) Project Expected ISD (C$B) High Pine 1Q18 0.4 CAD Stratton Ridge 1Q19 0.2 USD Stampede Lateral 1Q18 0.2 USD PennEast 2H19 0.3 USD Wyndwood 1Q18 0.2 CAD Hohe See Wind & Expansion – Germany 2H19 2.1 CAD Line 3 Replaceme
Slide 11: Project Execution Highlights
Project Execution Highlights Natural Gas: Natural Gas: Renewables: NEXUS Valley Crossing Rampion Texas Eastern TX Nueces Hub Rampion Valley Crossing Pipeline Offshore wind assets Under construction Mexico In pre-construction Brownsville In development • Construction began October 2017 • Construction
Slide 12: Line 3 Replacement Project Update
Line 3 Replacement Project Update • Critical infrastructure replacement project Edmonton • 2017 Canadian construction program completed Hardisty on time and on budget Kerrobert – 400km of pipeline laid Regina In service Construction segments • Wisconsin construction complete complete to date • Minne
Slide 13: Sponsored Vehicle Update
Sponsored Vehicle Update SEP IDR Elimination Rationale: SEP Equity Capital Structure (2018e) Proportion of distributed cash flows • Lower SEP cost of capital to be more competitive for future growth 18% 17% • Aligns interest of all unitholders • Simplifies the SEP structure Terms: 52% 83% ENB econom
Slide 14: 2017 Consolidated Financial Results Summary
2017 Consolidated Financial Results Summary Adjusted EBITDA ($ millions) DCF ($ millions, except per share amounts) 3 months ended Dec 31 12 months ended Dec 31 3 months ended Dec 31 12 months ended Dec 31 $10,317 $5,614 $6,902 $3,713 $2,963 $1,762 $1,741 $879 2016 2017 2016 2017 2016 2017 2016 2017
Slide 15: Q4 and FY 2017 Consolidated Adjusted EBITDA Variance
Q4 and FY 2017 Consolidated Adjusted EBITDA Variance (C$ Millions) Q4 FY 2016 Consolidated Adjusted EBITDA 1,762 6,902 EBIDTA Drivers: + Higher throughput on Mainline System Liquids Pipelines +127 +157 + New Projects placed into service - Normalization policy changes (make-up rights) + Spectra Energ
Slide 16: Q4 2017 and FY 2017 Consolidated DCF
Q4 2017 and FY 2017 Consolidated DCF Distributable Cash Flow Q4 2017 FY 2017 Consolidated Adjusted EBITDA 2,963 10,317 Maintenance Capital (345) (1,261) Financing costs (749) (2,751) Current income tax (49) (154) Distributions to NCI and redeemable NCI (272) (1,042) Cash distributions in excess of e
Slide 17: US Tax Reform Impacts
US Tax Reform Impacts No material economic impact within 2018 – 2020 planning horizon Q4 2017 Consolidated GAAP Reporting Impacts • Re-measurement of deferred tax liability for US federal tax rate reduction and other measurable impacts – Estimated $2.0B net recovery flows through GAAP earnings (non-
Slide 18: Re-affirming 2018 Guidance
Re-affirming 2018 Guidance Consolidated EBITDA ($MM) 2018 EBITDA Guidance Growth Drivers: 2017 2018e 2018e vs 2017 ~$12,500 ($MM) + New projects placed into service Liquids Pipelines 5,484 ~6,350 + Capacity optimization and supply growth $10,317 + Realized FX rates Gas Transmission + New projects pl
Slide 19: Spectra Energy Partners (SEP): Q4 2017 Financial Results
Spectra Energy Partners (SEP): Q4 2017 IDR elimination positions SEP for extended growth Financial Results (US$ millions, Q4 2016 FY 2016 FY 2017 FY 2018 except per share amounts) Q4 2017 Variance FY 2017 Variance Guidance Guidance Ongoing EBITDA 532 +22 2,179 +306 Ongoing DCF 358 +28 1,530 +235 $1,
Slide 20: Enbridge Energy Partners (EEP): Q4 2017 Financial Results
Enbridge Energy Partners (EEP): Q4 2017 Stable financial results reflect enhanced investor value proposition Financial Results (US$ millions, Q4 2016 FY 2016 FY 2017 FY 2018 except per share amounts) Q4 2017 Variance FY 2017 Variance Guidance Guidance Adjusted EBITDA 430 (39) 1,667 (214) $1,580 – 1,
Slide 21: ENF & Fund Group: Q4 2017 Financial Results
ENF & Fund Group: Q4 2017 New projects and strong mainline volume drive cash flow growth Financial Results (US$ millions, Q4 2016 FY 2016 FY 2017 FY 2018 except per share amounts) Q4 2017 Variance FY 2017 Variance Guidance Guidance Fund Group DCF 565 +74 1,976 +139 $1,900 – 2,100 $2,450 - 2,650 Dist
Slide 22: Funding Plan Update
Funding Plan Update Consolidated DEBT to EBITDA 2018 – 2020 Funding Plan*($C billions) 8 $45 6 Target: ≤ 5.0x $40 Optional asset sales 4 $35 2 DRIP/ $30 $13 Optional hybrid securities / 0 Optional SV Equity 2015 2016 2017 2018e 2019e 2020e $25 $4 $3 Sr. Debt Reduction Consolidated FFO to Debt Asset
Slide 23: Wrap Up
Wrap Up • 2017 was a transformational year – Well diversified, best in class North American energy infrastructure assets • Strong outlook – Fundamentals supportive – Secured growth projects • Strategic plan in place – Monetize non-core businesses – Strengthen balance sheet – 10% DCF growth • Focus o
Slide 24: ENBRIDGE
ENBRIDGE
Slide 25: Enbridge Income Fund Holdings Inc. Fourth Quarter 2017 Supplemental Slides
Enbridge Income Fund Holdings Inc. Fourth Quarter 2017 Supplemental Slides Investor Relations Nafeesa Kassam 403-266-8325 | nafeesa.kassam@enbridge.com
Slide 26: Fund Group: Distributable Cash Flow
Fund Group: Distributable Cash Flow (C$ Millions) 4Q16 4Q17 Liquids Pipelines 507 599 Gas Pipelines 40 56 Green Power 62 71 Eliminations and Other 15 22 Adjusted EBITDA 624 748 Cash distributions received in excess of equity earnings 23 9 Maintenance capital expenditures (38) (30) Interest expense (
Slide 27: Fund Group: 2017e-2020e Outlook
Fund Group: 2017e-2020e Outlook Distributable Cash Flow 2018e 2019e 2020e EBITDA Growth Drivers EIPLP Adjusted EBITDA ~$3,550 ~$3,650 ~$4,350 Liquids Pipelines ++ Maintenance capital ~(80) ~(85) ~(85) Current income taxes ~(230) ~(300) ~(450) Gas Pipelines ~ Financing Costs ~(550) Green Power ~ $1,9
Slide 28: Fund Group: Key Balance Sheets Metrics & Funding Progress
Fund Group: Key Balance Sheets Metrics & Funding Progress November 2017 12/31/17 $0.7B Consolidated Fund Group Leverage 40.5% ENF common share offering Consolidated Fund Group Debt/EBITDA 5.3x Enbridge Income Fund Credit Ratings Baa3 / BBB (High)(2) Enbridge Pipelines Inc. Credit Ratings BBB+ / A (3
Slide 29: Dividend per Share Growth Beyond 2020
Significant Dividend Income Dividend per Share Growth Beyond 2020 2015 – 2020e • Low cost, phased expansions of $3.00 the Mainline $2.50 • Alliance pipeline expansion $2.00 $2.26 – Expression of interest underway $2.05 $1.87 • Right of first offer with ENB on $1.50 $1.59 growth within existing asset
Slide 30: Investor Value Proposition
Investor Value Proposition Premier Canadian Energy Infrastructure Income Investment Outstanding Low risk Visible growth Strong sponsor asset footprint business model • High quality, strategically • Minimal commodity price • 10% annual DPS growth • Aligned with ENF positioned Canadian and throughput
Slide 31: Spectra Energy Partners Fourth Quarter 2017 Supplemental Slides
Spectra Energy Partners Fourth Quarter 2017 Supplemental Slides Investor Relations Roni Cappadonna 713-627-4778 | Roni.Cappadonna@enbridge.com
Slide 32: Spectra Energy Partners (SEP): Ongoing Distributable Cash Flow
Spectra Energy Partners (SEP): Ongoing Distributable Cash Flow (US$ Millions) 4Q16 4Q17 US Transmission 466 507 Liquids 63 60 Over 10 years Other (19) (35) Ongoing EBITDA 510 532 ADD: of consecutive quarterly Earnings from equity investments (35) (68) distribution increases Distributions from equity
Slide 33: Spectra Energy Partners: Key Balance Sheets Metrics
Spectra Energy Partners: Key Balance Sheets Metrics 12/31/17 Total Debt $8.5B Financial Covenant Metrics(1) 4.1x Debt/EBITDA Credit Ratings(2) Baa2 / BBB+ / BBB Available Liquidity $0.4B (1) Calculated in accordance with the credit agreements; max 5.0x (2) Moody’s / S&P / Fitch senior unsecured rati
Slide 34: Projects in Execution
Projects in Execution Continue to pursue development projects In-Service Counterparties Est. CapEx Date (USD $MM) Bayway Lateral 4Q17 30 NEXUS(1) 3Q18 1,300 2018 TEAL 3Q18 200 Atlantic Bridge(2) 4Q18 500 STEP 4Q18 130 Stratton Ridge 1H19 200 2019 PennEast(1) 2H19 260 Lambertville East 2H19 45 Texa
Slide 35: Stable. Disciplined. Reliable.
Investor Value Proposition Stable. Disciplined. Reliable. We go “where the lights are” – connecting diverse supply basins with regional demand markets – “last mile” competitive advantage Attractive Stable Outstanding Prudent financial distribution business model asset footprint management growth • P
Slide 36: Enbridge Energy Partners Fourth Quarter 2017 Supplemental Slides
Enbridge Energy Partners Fourth Quarter 2017 Supplemental Slides Investor Relations Roni Cappadonna 713-627-4778 | Roni.Cappadonna@enbridge.com
Slide 37: EEP Unit Structure
EEP Unit Structure as of December 31, 2017 (Millions of units) Unit Class(1) ENB(5) Public TOTAL Cash Paying LP units(2) A 110.8 215.7 326.5 B 7.8 - 7.8 E 18.1 - 18.1 EEQ PIK Shares(4) 10.5 79.3 89.8 Incentive units – Class F(6) - - - TOTAL 147.2 295.0 442.2 Economic Interest(3) 34.6% 65.4% (1) Does
Slide 38: Low-Risk “Utility-Like” Business
Low-Risk “Utility-Like” Business Reliable Business Model Provides Highly Predictable Cash Flows Investment Grade Direct Commodity Stable Business Exposure (CFaR)(2) Customers ~96% ~100% <1% of cash flow underpinned of revenue from of cash flow directly by long term cost of service or investment grad
Slide 39: Investor Value Proposition
Investor Value Proposition Attractive long term risk-return proposition Low risk, pure-play liquids pipeline MLP provides attractive risk-adjusted returns for unitholders Pure-play liquids Low risk Prudent financial Moderate pipeline MLP business model management visible growth • Exceptional North •