Enbridge Inc. · TSX:ENB
Enbridge — Investor Day (December 2017)
53 slides from Enbridge's investor day presentation, Dec 13, 2017
Slide 1: Enbridge Investor Update Meeting 2017
Enbridge Investor Update Meeting 2017
Slide 2: Contents
Contents Legal Notice 01 Opening Remarks 04 Strategic Overview 06 Gas Transmission and Midstream 16 Utilities 24 Liquids Pipelines 30 Corporate Finance 38 Concluding Remarks 49
Slide 3: 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”), Enbridge Income Fund Holdings Inc. (“ENF”), Enbridge Energy Partners, L.P. (“EEP”) and Spectra E
Slide 4: Legal Notice (continued)
and other stakeholder approvals and support; hazards and operating risks that may not be covered fully by insurance; regulatory and legislative decisions and actions and costs complying therewith; effectiveness of the various actions resulting from strategic review processes; public opinion; and wea
Slide 5: Non-GAAP reconciliation notes
SEP: A reconciliation of forward non-GAAP measures for 2018 to the most directly comparable GAAP measures is available on the SEP website. The reconciliations of forward looking non-GAAP financial measures to comparable GAAP measures beyond 2018 are not available due to the challenges with estimatin
Slide 6: Safety Moment
Enbridge Investor Days December 12 – 13, 2017 New York City & Toronto safety moment Building Evacuation Procedures Enbridge Investor Day 4
Slide 7: Agenda
Agenda Strategic Overview Al Monaco 8:30 Business Unit Updates: Gas Transmission & Midstream Bill Yardley 9:30 Utilities Cynthia Hansen 10:00 Liquids Pipelines Guy Jarvis 10:20 Corporate Finance John Whelen 10:50 Concluding Remarks Al Monaco 11:50 Sponsored Vehicle Breakout Q&A Session to follow 3 3
Slide 8: Strategic Overview
Strategic Overview Al Monaco President & CEO North America’s Leading Energy Infrastructure Company Enbridge % of N.A. Inland Flows • Premium portfolio of strategically positioned franchises ~28% ~20% ~12% Crude Oil Transported Natural Gas Transported Natural Gas Processed • Serving critical supply b
Slide 9: Today's Key Themes; Strategic Positioning
Today’s Key Themes 1. The value of critical energy infrastructure has never been higher. 2. Enbridge’s core assets are among the most attractive, long-life infrastructure in North America. 3. Our focus is to surface, protect and grow the value of our crown jewel pipeline and utility assets. 4. Finan
Slide 10: Our Core Businesses; Strategic Review: G&P Midstream
Our Core Businesses Competitive advantages Growth and risk • Transport ~28% of N.A. crude supplies to market • Long-lived resource supply basins minimizes risk Liquids Pipelines • Sole source refinery connections of 1.9MMbpd • Fundamentals support expansion & extension potential & Terminals • Lowest
Slide 11: Strategic Review: Renewable Power; Repositioning the Business Mix
Strategic Review: Renewable Power Competitive advantages Growth and risk • Strong demand for renewable power • Good scale and diversification North America • Long-term contracted cash flows • Strong stable PPA’s Onshore • Market value exceeds hold value • Competitive development landscape • Fewer lo
Slide 12: Capital Expenditure Program, 2018–2020; Balance Sheet Strengthening Actions
Capital Expenditure Program, 2018–2020 Annual Cap Ex by Segment (C$ Billion) EBITDA by Segment (C$ Billion) 15 15 ~$14 $22 12 12 ~$9 9 ~$8 9 6 6 Green Power ~$5 Gas Distribution 3 Gas Transmission 3 Liquids Pipelines Maintenance Capital 0 - 2017 e 2018e 2019e 2020e 2017 e 2018 e 2019 e 2020 e Secure
Slide 13: Conservative Funding Plan, 2018-2020; Balance Sheet Strength
Conservative Funding Plan, 2018-2020 2018 – 2020 Funding ($C billions) • $26B of funding required Optional asset sales • $23B of internally generated cash flow and identified funding actions DRIP $13 Optional hybrid securities Optional SV equity • Significant buffer to meet remaining $4 $3 Sr. Debt
Slide 14: ACFFO/Share Growth Outlook; Post-2020 Growth Potential
ACFFO/Share Growth Outlook $6.00 Future Growth Drivers 2021+ $5.00 • Organic growth opportunities in core $4.00 business platforms • Annual cash flow, net of dividends, of ~$5B $3.00 available for reinvestment $2.00 $1.00 – 2017E 2018E 2019E 2020E 2021+ 10% ACFFO/share CAGR through 2020; Strong fund
Slide 15: Streamlining Our Operations; Corporate Structure
Streamlining Our Operations Spectra Transaction Objectives Synergy Targets • Capture Spectra acquisition cost and tax synergies • Optimize supply chain • Achieve top quartile cost performance Tax On Track General O&A costs $800 Million Timing 2017 2018 2019 Supply chain Cost synergy capture ~50% ~80
Slide 16: Key Priorities; Investor Value Proposition
Key Priorities $22B secured capital Focus on safety and reliability Cost and tax synergies expenditure plan Regulated pipeline and utility Top quartile cost performance Drives strong ACFFO growth model through 2020 Sponsored vehicle actions Balance sheet strength and Developing new
Slide 17: Dividend Growth Outlook
Dividend Growth Outlook • 22 years of sustained dividend increases 10% • 10% dividend growth in 2018 3 Year CAGR • 10% 3-year CAGR, 2018-2020 • Conservative payout ratio of below 65% 11% 22 Year CAGR (1996-2017) 1996 2017e Long history of strong and sustainable dividend growth 19 Q&A Enbridge Invest
Slide 18: Gas Transmission & Midstream: Premier Footprint
Gas Transmission & Midstream Bill Yardley EVP & President Gas Transmission & Midstream Premier Gas Transmission Footprint Canadian Gas Transmission & Midstream Gas Transmission Value Proposition • Unparalleled asset footprint • Safe, reliable operations • Connecting diverse supply basins with growin
Slide 19: Contributor to Enbridge EBITDA; Compelling Gas Transmission Business
Strong, Growing & Stable Contributor to Enbridge EBITDA 2018e EBITDA Enbridge • Transmission business predominantly Other 4% Gas Utilities 13% Gas drives GTM earnings & Power Transmission 85% • Significant contribution to stable, fee-based Gas 32% Transmission earnings from transmission businesses &
Slide 20: Solid Gas Transmission Base; Secured Growth Projects
Solid Gas Transmission Base GTM Reservation Revenue (Based on revenues for 12 months ended 12/31/16) 98% 97% 99% 97% 99.5% 94% 95% 97% 94% 92% 72% Achieved Peak Delivery N/A Days in 2016 Average Contract 8 13 7 9 6 8 25 17 Life of 5 8 Terms years years years years years years years years lease years
Slide 21: Sabal Trail & Valley Crossing; NEXUS
Sabal Trail & Valley Crossing Sabal Trail Valley Crossing AL GA TX Sabal Trail Nueces Header Valley Crossing FL Mexico 516 miles of greenfield pipeline successfully and Great progress on construction, project is safely placed into service on time and on budget currently ahead of schedule and on budg
Slide 22: N. American Natural Gas Demand Grows & Diversifies
N. American Natural Gas Demand Grows & Diversifies Natural Gas Demand Growth by Region NA Natural Gas Demand by Sector (Bcf/d increases by 2035) (Bcf/d) 140 120 LNG Exports W. Canada +3.5 E. Canada 100 Mexico Exports +0.6 Other Northeast 80 W. North Central +3.5 Power Gen Pacific +2.1 +1.6 Mountain
Slide 23: Northeast & New England; Southeast Markets Opportunities
Development opportunities in next 5 years Northeast & New England Northeast / New England • Demand continues to increase • Solution needed to bring affordable gas to the region New England BOSTON Philadelphia Market Opportunities • Market opportunities for industrial Dawn Hub and exports DETROIT NYC
Slide 24: Gulf Coast Markets; Western Canada Opportunities
Development opportunities in next 5 years Gulf Coast Markets Gulf Coast • Epicenter of demand for LNG and Mexico exports Permian MS Permian LA TX • DCP offers Permian solutions to producers NOLA Offshore US Gulf Coast MT BELVIEU LNG & Industrial $2-4B in opportunities Mexico Offshore Exports to Mexi
Slide 25: Key Priorities
Gas Transmission & Midstream Key Priorities • Advance execution projects • Grow stable, take-or-pay • Leverage scale of enterprise safely and successfully business • Take advantage of synergy • Deliver projects on time and • Ensure re-contracting of opportunities on budget base revenue • Secure sust
Slide 26: Utilities: Best in Class Utility Footprint
Utilities Cynthia Hansen EVP, Gas Distribution and Power Operations Best in Class North American Utility Footprint 2018e EBITDA Largest distribution franchises in Canada Enbridge • Valued assets underpinned by regulated, low 1998 Other 4% risk business model with incentive upside 13% Gas Distributio
Slide 27: Strong and Consistent Growth; Dawn Hub Opportunities
Highly transparent rate base growth driven by position and competiveness Strong and Consistent Growth Combined Rate Base Growth (C$ B) Residential Annual Heating Bills by Fuel 14 $3,000 12 $2,440 $2,500 $2,302 10 $2,021 $2,000 8 Union Gas $1,500 6 $1,000 $893 EGD 4 $500 63% 61% 56% 2 Savings Savings
Slide 28: Incentive Mechanisms; Utility Amalgamation Plan
Incentive mechanisms have benefited customers and shareholders Current Incentive Regulation: EGD: Custom IR Union Gas: Price Cap – Rates adjusted for forecasted capital – Price cap increasing revenues by 40% of inflation/year – ROE reset each year – “Capital pass through” mechanism – Excess above al
Slide 29: Utility Amalgamation Benefits; Implementation Timeline
Utility Amalgamation Benefits Customers & Shareholders Synergy potential: Top Natural Gas Utilities in N. America by Volume • Customer care Total Annual U.S. Volumes Total Customers Rank Company Name (Bcf) (Millions) • Distribution work management Enbridge Utilities 884.0 3.6 • Utility shared servic
Slide 30: Future Growth; Key Priorities
Future Growth • Rate base renewal and growth: – Customer additions 50,000/year – Community Expansion – $1 B/year + capital program – Continue to optimize infrastructure in amalgamated utility • Other opportunities: – Renewable Natural Gas (RNG) – Compressed Natural Gas (CNG) – Integrated gas & elect
Slide 31: Q&A
ENBRIDGE Enbridge Investor Day 29
Slide 32: Liquids Pipelines: Premier Crude Oil Infrastructure
Liquids Pipelines Guy Jarvis EVP & President Liquids Pipelines North America’s premier crude oil infrastructure portfolio 70% Largest crude oil pipeline network in the world of total oil sands production can be transported on the Regional system to Edmonton and Hardisty • 27,600 km of pipe serving h
Slide 33: Contributor to Enbridge EBITDA; Mainline at Maximum Capacity
Large Stable Contributor to Enbridge EBITDA 2018e EBITDA 2018e LP EBITDA by Business 4% Other Highly Contracted Enbridge 4% 3% Southern Lights Bakken System Long Term Take-or-Pay Common carrier with indexed rate*; Long Term Take-or-Pay Other 4% 14% Regional Oil Sands Long Term Take-or-Pay Gas Utilit
Slide 34: Liquids Pipelines Project Execution; Line 3 Replacement
Liquids Pipelines Project Execution 2017 2019 Projects Completed Mainline Secured Projects Project ISD Contract life ~$6B ~$9B Athabasca Pipeline Twin Jan 25 yrs Projects placed into service Projects to be placed into 2017 service 2019 Norlite Diluent Pipeline May 25 yrs Bakken Pipeline System June
Slide 35: Canadian Oil Sands Supply Outlook; Mainline Utilization
Canadian Oil Sands Positioned for Steady, Longer Term Growth Canadian Oil Sands Supply Forecasts* (KBPD) 6,000 CERI • Expected continued growth in the oil sands 5,000 NEB supports Enbridge systems upstream, mainline and market access 4,000 CAPP • Independent forecasts expect growth of ~850 KBPD in o
Slide 36: Mainline Competitive Positioning beyond 2021
Mainline Competitive Positioning beyond 2021 • PADD II market provides the highest netback for WCSB producers Chicago Netback Chicago Pricing** $53 • Spot barrels on 3rd party pipelines to Enbridge Toll ($5.50) USGC erodes WCSB producer netback WCS Netback $47.50 USGC Netback on Competing Spot Barre
Slide 37: Mainline Expansion Opportunities; Other Development
Low cost, highly executable, staged expansions to match supply growth Mainline Expansion Opportunities Hardisty Incremental Capacity 2019 Capacity (KBPD) +450 kbpd Mainline System DRA Optimization +75 expansion capability BEP Idle* +100 Incremental Capacity 2019+ System Station Upgrades +100 Line 4
Slide 38: New Platform Development Opportunities; Key Priorities
New Platform Development Opportunities Permian Strategy – Gray Oak USGC Strategy Cushing PERMIAN Mt Belvieu Mt $2-3B in opportunities Belvieu Freeport Freeport Objective: Expand liquids footprint into Permian Basin Objective: Leverage expertise to expand footprint in USGC Opportunity: High drilling
Slide 39: Q&A
ENBRIDGE Enbridge Investor Day 37
Slide 40: Corporate Finance: Finance in 2017
Corporate Finance John Whelen Executive VP & Chief Financial Officer Finance in 2017 A busy year; solid execution progress Spectra closing – ~$37B all stock transaction Integration and synergy realization – Initial reorganization completed; >50% of targeted cost synergies realized Capital raising –
Slide 41: Finance Priorities 2018-2020; Corporate Risk Profile
Finance: Ongoing Priorities 2018-2020 Financial Strength & Stability supports Financial Objectives • Strong investment grade credit profile • Fund secured growth program • Ready access to capital • Strengthen balance sheet • Ample liquidity • Reinforce reliable business model • Proactive risk manage
Slide 42: Market Price Risk Exposure; 2017 Funding Progress
Market Price Risk Exposure Consolidated Cash Flow at Risk1 2018 Consolidated FX Hedge Position3 (CFaR) 0% 20% 40% 60% 80% 100% FX - Cash Flow Basis ~45% 2018 – 2020 Avg: 40% 2018 – 2020 FX - Earnings Basis ~75% Avg: 65% 2018 Consolidated Debt Position Fixed Fixed RateTotal Rate/ TotalDebt Debt2 ~85%
Slide 43: Capital Expenditure Profile; Consolidated Funding Plan
Consolidated Capital Expenditure Profile, 2018-2020 Total Capital Expenditures by Segment Total Growth Capital Program (C$ Billion) by Segment $10 ~$9.0 ~$8.0 ~$22B $8 $6 34% 46% ~$5.0 $4 12% $2 8% Consolidated Maintenance $0 Capital 2018e 2019e 2020e Liquids Pipelines Gas Transmission Gas Distribut
Slide 44: Balance Sheet Strengthening; 2018 Outlook: Reporting Changes
Balance Sheet Strengthening Consolidated DEBT to EBITDA Current Credit Rating 8 Enbridge Unsecured Debt Ratings1 6 Target: ≤ 5.0x DBRS BBB High (stable) 4 2 Fitch BBB+ (stable) 0 Moody’s Baa2 (negative) 2015 2016 2017e 2 2018e 2019e 2020e Standard & Poors BBB+ (stable) Consolidated FFO to Debt 20% T
Slide 45: Secured Capital Program Drives EBITDA Growth
Secured Capital Program Drives EBITDA Growth over Planning Horizon Secured Capital by In Service Date (C$ Billion) 15 ~$13B 2018e 2019e High Pine 0.4 CAD Stratton Ridge 0.2 USD ~$12B 12 Rampion Wind 0.8 CAD PennEast 0.3 USD Stampede Lateral 0.2 USD Hohe See Wind 2.1 CAD Wyndwood 0.3 CAD L3R – Canada
Slide 46: Financial Outlook 2018e ACFFO
Enbridge Inc. Financial Outlook – 2018e Available Cash Flow from Operations (ACFFO) 2018 Guidance Key Sensitivities ACFFO Annualized Base Plan ACFFO/ After looking at accretive existing hedges 2018 Estimate (1)Driver Assumption Share Adjusted EBITDA ~$12,500 Operations Maintenance capital ~(1,300) L
Slide 47: Longer Term Financial Outlook, 2018-2020
Longer Term Financial Outlook, 2018 – 2020 $6.00 $5.00 2018 2019 2020 ACFFO Estimate Estimate Estimate Adjusted EBITDA ~$12,500 ~$13,100 ~$15,000 $4.00 Maintenance capital ~(1,300) ~(1,400) ~(1,400) $3.00 Current income taxes ~(300) ~(400) ~(500) $2.00 ACFFO ~$7,250 ~$7,600 ~$8,700 ACFFO/Share $4.15
Slide 48: ENF and SEP Financial Outlook, 2018e-2020e
ENF Financial Outlook, 2018e-2020e 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 ~ C
Slide 49: EEP Financial Outlook; Finance Priorities
EEP Financial Outlook, 2018e-2020e Distributable Cash Flow 2018e 2019e 2020e EBITDA Growth Drivers Adjusted EBITDA ~$1,680 ~$1,800 ~$2,100 Book value call options1 ++ Maintenance capital ~(40) ~(50) ~(75) Index rates ~ Financing Costs ~(410) Cushing storage ~ Non-controlling interests ~(400) Cost ma
Slide 50: Q&A
ENBRIDGE Enbridge Investor Day 48
Slide 51: Concluding Remarks: Key Takeaways
Concluding Remarks Al Monaco President & CEO Key Takeaways • Pure regulated pipelines/utility model – Focused on crown jewel businesses – De-emphasize, sell, monetize non-core assets • Further strengthen balance sheet – Achieve target metrics by end of 2018 • Deliver premium cash flow & dividend gro
Slide 52: Q&A
Q&A Enbridge Investor Days December 12 – 13, 2017 New York City & Toronto Enbridge Investor Day 50
Slide 53: Enbridge Investor Relations contact
Enbridge Inc. Enbridge Investor Relations 200, 425 - 1st Street S.W. investor.relations@enbridge.com Calgary, Alberta, Canada T2P 3L8 Ph: 1-800-481-2804 www.enbridge.com