Slide 1: Enbridge Mid-Year Investor Update Meeting 2017
Enbridge Mid-Year Investor Update Meeting 2017
Slide 2: Contents
Contents Opening Remarks 01 Strategic Overview 04 Gas Transmission and Midstream 17 Utilities 27 Liquids Pipelines 33 Offshore Power 44 Corporate Finance 50
Slide 3: Investment Community Update - IR Outreach Schedule
Enbridge Investment Community Update - June 8 & 9 Toronto | New York IR Outreach Schedule Investor Outreach Plan Second Quarter 2017 Fourth Quarter 2017 Mid-Year Investor Update, June 8 – 9 Enbridge Days Investor Conference, early December - High level strategic update - Roll-out of strategic plan -
Slide 4: Safety Moment and Agenda
safety Building Evacuation moment Procedures 3 Agenda Strategic Overview Al Monaco 9:00 am Business Unit Updates: • Gas Transmission & Bill Yardley 9:35 am Midstream • Utilities Cynthia Hansen 10:10 am • Liquids Pipelines Guy Jarvis 10:30 am • Offshore Power Vern Yu 11:10 am Corporate Finance John W
Slide 5: 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”) with information about Enbridge and its subsidiaries and affiliates, including management’s asses
Slide 6: Strategic Overview Key Themes
Strategic Overview Al Monaco President & CEO Key Themes • Spectra Energy transaction diversifies cash flow and opportunity set, repositions Enbridge for the future • Excellent progress on integration; on track with plan • Unrivaled investor value proposition combining organic growth, low risk profil
Slide 7: Evolution of Enbridge
Evolution of Enbridge Earnings Contributions (C$ Billion) • Exceptional historic growth 2001 2015 – Heavily weighted to liquids • Strategic priority – Reposition for the future – Diversify and extend growth Liquids pipelines Gas transmission & midstream Gas utilities, renewable power & other • Crite
Slide 8: Key Priorities
Key Priorities • 6 leading platforms • Safety & operational reliability • Focus on optimizing returns • Disciplined capital allocation • Low risk commercial models • Efficiency and effectiveness • Visible dividend growth • Balance sheet strength • Sponsored Vehicles Focused on maximizing shareholder
Slide 9: Connecting Supply to Growing Demand & Fueling Exports
Strong Fundamentals Underlie Our Assets Connecting Supply to Growing Demand & Fueling Exports North American energy advantage: • Unconventional resources, technology, structural cost improvements • Expanding role in global energy trade • $700-900B in new infrastructure required *1 N.A. Exports Growt
Slide 10: Recently Secured Organic Growth Projects – $3.6B
Recently Secured Organic Growth Projects – $3.6B Hohe See Offshore Wind & Spruce Ridge: $0.5B T-South Expansion: $1.0B Expansion: $2.1B DENMARK BC Station 2 Aitkin Creek Plant BC Hohe See McMahon Hohe See Plant Expansion 112MW Station 2 T-South 497MW Hohe See AB Vancouver GERMANY • 402 MMcf/d expans
Slide 11: Approach to Acquisitions & Divestitures
Approach to Acquisitions & Divestitures 1 2 3 Acquire new platform Acquire assets to Rationalize non-growth with embedded enhance organic growth assets to optimize returns organic growth • Spectra Energy • Seaway System • South Prairie Region Assets • Consumers’ Gas • Alliance Pipeline • Ozark Pipel
Slide 12: #1 Priority: Safety & Operational Reliability
#1 Priority: Safety & Operational Reliability Key Program Elements • Management systems • Governance structure • Industry leadership and benchmarking • Technology and research • Safety culture • Compliance and assurance 14 Investment Community Update 10
Slide 13: Portfolio Diversification
Portfolio Diversification 2016 Pro Forma EBIT Secured Project Inventory 2017 – 2020 Renewable Power & Other Renewables Gas Utilities ~2% Gas Midstream ~13% Gas Utilities Gas Transmission ~35% ~50% Liquids Pipelines $31B Liquids Pipelines & Midstream Gas Pipelines Balanced portfolio of assets & growt
Slide 14: Financial Strength & Payout Flexibility
Financial Strength & Payout Flexibility Consolidated Pro Forma Debt to EBITDA End of year Free Cash Flow ($C Billions) 6.2x 5.5x 5.1x 5.0x 4.3x 2016 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e Dividends Paid Free Cash Flow Free cash flow is ACFFO after dividends Enbridge will maintain a strong f
Slide 15: Synergy Capture
Synergy Capture Synergy Targets Forecast annual run rate synergies by 2019 Stream $CAD MM Supply chain optimization Cost 540 Tax Other costs Tax 260 $800Million Timing 2017 2018 2019 Cost synergy capture ~50% ~80% 100% General O&A costs Tax synergy capture 0% 0% 100% Integration advancing well; syne
Slide 16: Sponsored Vehicles
Sponsored Vehicles Compelling Differentiated Strategic Stand-Alone Investor Value Minimize objectives: Simplification Businesses Propositions Cost of Capital Detail: • Eliminated one • Visible embedded • SEP – Leading Gas • Sponsored Vehicles public vehicle organic growth Pipeline MLP self-fund on (
Slide 17: Key Priorities - Progress and Outlook
Key Priorities - Progress and Outlook • $27B secured projects in execution • Focus on safety and reliability • Capturing cost synergies • $4B recently secured from backlog • Diversification achieved • Active portfolio management • Substantial ACFFO growth • Strong commercial underpinning • Asset mon
Slide 18: Dividend / Share Outlook
Driving Long Term Dividend Growth Dividend / Share Outlook • 15% dividend increase in 20171 • 10-12% annual dividend growth (2017-2024) • Conservative payout ratio of 50% - 60% Dividend growth beyond 2020 supported by: • Organic growth development projects $2.12 • Ongoing streamlining initiatives •
Slide 19: Gas Transmission & Midstream
Gas Transmission & Midstream Bill Yardley EVP & President Gas Transmission & Midstream Gas Transmission & Midstream Overview 3 strong platforms driving growth North American Liquids Pipelines U.S. Transmission Canadian Gas Natural Gas Transmission & Utilities Midstream Renewable Power U.S. Midstream
Slide 20: Gas Transmission & Midstream Assets
Gas Transmission & Midstream Assets Critical gas infrastructure • Transport 20% of natural gas consumed in the US • Connecting to key demand pull markets: US Northeast, US Southeast, US Gulf Coast • Predominantly regulated, reservation-based revenues • Well-positioned for ongoing growth GTM Stats Mi
Slide 21: U.S. Transmission
Gas Transmission & Midstream Growth primarily focused on transmission projects EBITDA with Secured Projects (C$MM) $5,000 Incremental EBITDA from expansion Base Base EBITDA EBITDA $- 2017 2018 2019 2020 Execution projects deliver strong earnings growth through the end of the decade Note: Graph is fo
Slide 22: U.S. Transmission
U.S. Transmission Strong and growing portfolio Rock Solid Base EBITDA Fully Subscribed Reservation-based contracts 8 year average contract term Strong Growth from execution and development opportunities 7 U.S. Transmission Recent successes • 98% revenue renewal on Texas Eastern and Algonquin • Place
Slide 23: U.S. Transmission Revenue Stability
U.S. Transmission Revenue stability in base business U.S. Transmission Reservation Revenue (Based on transmission revenues for 12 months ended 12/31/16) 2016 Usage & 98% 97% 99% 97% 97% 97% Other Revenue 94% 95% 2016 Reservation Revenue 72% Achieved Peak Delivery Days in 2016 Average Contract Terms
Slide 24: Sabal Trail Transmission
U.S. Transmission Sabal Trail Transmission – Critical gas supply for Florida New interstate pipeline into Florida increases diversity of supply Project Scope: 1+ Bcf/d of capacity connecting Transco Station 85 supply to Florida power generation market CapEx: ~C$4.2B (100%); Enbridge’s expected p
Slide 25: Canadian Gas Transmission & Midstream
Canadian Gas Transmission & Midstream Canadian Gas Transmission and Midstream Unsurpassed Western Canada asset base Transmission Pipelines Capacity Length STATION 2 Pipelines (Bcf/d) (km) Commercial Construct BC Pipeline 2.9 2,900 Regulated, cost of service BC Take-or-pay negotiated rate Pipeline Al
Slide 26: Canadian Gas Secured Projects
Canadian Gas Transmission and Midstream Secured projects Current supply push and demand pull projects in execution ~C$2.8B Project Expected ISD Capital (C$MM) High Pine Jackfish Lake Jackfish Lake - T-North 4/1/17 $245 Spruce Ridge STATION 2 High Pine - T-North 2017 $425 Wyndwood Wyndwood - T-North
Slide 27: U.S. Midstream
U.S. Midstream U.S. Midstream Successfully de-risking the business • DCP has stabilized cash flows – Limited commodity exposure – De-risked contracts – Significantly lowered break-even – Upside with commodity price recovery Gulf Coast • Organic pipeline opportunities in Permian basin Express – Gulf
Slide 28: Gas Transmission & Midstream Key Priorities
Gas Transmission & Midstream Key priorities summary • Safely and successfully • Grow stable, take-or-pay business • Leverage scale of enterprise advance execution projects • Maintain little or no commodity risk • Take advantage of synergy • Secure sustainable, high return opportunities growth opport
Slide 29: Utilities
Utilities Cynthia Hansen EVP, Gas Distribution and Power Operations Gas Distribution Serving 3.5 million retail customers North American Liquids Pipelines U.S. Transmission Natural Gas Canadian Transmission Utilities & Midstream Renewable Power U.S. Midstream 2 Investment Community Update 27
Slide 30: Best in Class Utility Footprint
Best in Class Utility Footprint Key element of Enbridge’s low risk business profile ON • Largest and best situated gas distribution franchises in Canada • Highly valued asset base underpinned QC by regulated, low risk business model Union Gas with incentive upside Utilities 13% EGD • Exceptional ong
Slide 31: Competitive Positioning
Competitive Positioning Natural gas cost competitiveness further supports rate base growth Residential Energy Prices* ($/GJ) $40 Heating Oil • Natural gas is the most competitively $35 Electricity priced fuel source $30 Propane – Low cost supply diversity: Access to Utica $25 and Marcellus in additi
Slide 32: Strong Continued Capital Deployment Outlook
Strong continued capital deployment outlook Total Capital (C$ MM) • Annual capital deployment of >$1B 1,600 1,400 • Core regulated growth capital to meet 1,200 strong customer additions 1,000 • Diversified growth opportunities include 800 – Transmission and storage projects 600 400 – Community expan
Slide 33: Historical Financial Performance
Historical Financial Performance Stable low-risk regulated business delivers strong risk adjusted returns EGD: Historical Regulated Returns Union Gas: Historical Regulated Returns 14% 14% 12% 12% 10% 10% 8% 8% 6% 6% 4% 4% 2% 2% 0% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2
Slide 34: Gas Distribution Key Priorities
Gas Distribution Key Priorities Summary • Strong continued rate base • Establish new, balanced • Significant opportunity to growth regulatory framework with achieve rate payer and incentive upside shareholder synergy benefits • Expansions of Dawn area infrastructure • Attach new communities 11 Q&A I
Slide 35: Liquids Pipelines
Liquids Pipelines Guy Jarvis EVP & President Liquids Pipelines North American Liquids Pipelines Premier market position and growth platform North American U.S. Natural Gas Liquids Pipelines Pipelines Natural Gas Canadian Transmission Utilities & Midstream Renewable Power U.S. Midstream 2 Investment
Slide 36: North America's Premier Portfolio
Liquids Pipelines System North America’s Premier Portfolio • High quality producing basins • Access to the best refining markets • Competitive tolls drive highest producer netbacks • Stable, low risk commercial underpinnings • Strong, creditworthy customers • Unique service offerings & flexibility 3
Slide 37: The Mainline System
The Mainline System Unparalleled strategic footprint • Comprised of Canadian Mainline and Lakehead System in the U.S. – Largest, longest and most complex petroleum pipeline system in the world Edmonton • Combined annual operating capacity of Hardisty ~2.85 MMbpd Kerrobert – January 2017 record deliv
Slide 38: Mainline Competitive Positioning
Mainline Competitive Positioning Mainline utilization driven by connected refineries and downstream pipelines 1 Mainline system is sole source 1. of supply for ~1.9 mmbpd refinery demand 2. 2 >1 mmbpd of downstream pipeline take or pay 1.9 mmbpd commitments support Mainline Sole sourced supply syste
Slide 39: Mainline – WCSB Capacity Requirements
Mainline – WCSB Capacity Requirements Supply forecast supports incremental pipeline capacity growth to match demand WCSB Capacity Outlook (KPBD) 6,000 5,500 CAPP 2016 5,000 4,500 4,000 3,500 3,000 Enbridge Mainline 2,500 2,000 Western Canadian Demand + 1,500 1,000 Existing Infrastructure 500 - 2017
Slide 40: Mainline – Secured Growth
Mainline – Secured Growth Improved reliability and capacity expansion • Line 3 Replacement – Restores line capacity to 760 kbpd (+375 kbpd) Edmonton – Expected In-Service: 2019 Hardisty – Capital: $7.5B ($4.9B CAD, $2.6B USD) Kerrobert – 15 year toll surcharge on every mainline barrel +375 kbpd – Lo
Slide 41: Mainline – WCSB Capacity Requirements
Mainline – WCSB Capacity Requirements Mainline expansions are best positioned to meet industry capacity needs WCSB Capacity Outlook (KPBD) 6,000 5,500 CAPP 2016 5,000 Post 2019 Enbridge Post-2019 Enbridge incremental capacity Incremental 4,500 Line 3 Replacement + 2019 Incremental Capacity Capacity
Slide 42: Express & Platte Pipelines
Express & Platte Pipelines Significant PADD IV presence with potential commercial synergies •Express Pipeline – 280 kbpd Hardisty – Hardisty to Casper – Uniquely situated pipeline for import of growing Canadian crude supply Express – Stable, secure fee-for-service revenue Buffalo •Platte Pipeline –
Slide 43: Oil Sands
Oil Sands Stable and secure, embedded growth • Unparalleled gathering system that connects WCSB crude oil with transportation access to valuable markets • Current throughput capacity into Edmonton & Hardisty hubs ~2MMbpd – 9 connected Oil Sands projects, 11 by year end – Average contract length of 2
Slide 44: Bakken Region
Bakken Region Enhanced market access for light crude supply • North Dakota System – 210 kbpd BAKKEN – Highly competitive toll to high value markets drives strong utilization – Western system upgrades could provide improved market access and optimize line capacity • Bakken Pipeline System DAPL – Enbr
Slide 45: Liquids Pipelines Key Priorities
Liquids Pipelines Key priorities summary • Execute on $14B of secured • Operate safely and reliably • Leverage Express/Platte within projects from 2017-2019 Enbridge portfolio • Maximize current mainline • Grow our business through low throughput • Identify additional synergy cost capacity expansion
Slide 46: Offshore Wind
Offshore Wind Vern Yu Executive VP & Chief Development Officer Offshore Wind Investing in the future of energy North American Liquids Pipelines U.S. Transmission Natural Gas Canadian Transmission Utilities & Midstream Renewable Power U.S. Midstream 2 Investment Community Update 44
Slide 47: Context for Renewable Power Business
Context for Renewable Power Business Long-Term Shift Towards Renewable Power Fastest Growing Source of Energy Electricity Capacity (GW) (% change/year, 2014 – 2025e) 6,000 15% 5,000 Source: IEA 15%/yr Source: IEA 4,000 10% 3,000 2,000 5% 1,000 Fossil Fuels Renewables* 1.6%/yr 0.7%/yr 0.1%/yr 0 0% 20
Slide 48: Attractive Fundamentals
Attractive Fundamentals Technology improvement reducing costs European Levelized Cost of Electricity by Fuel (€/MWh) 120 costs for offshore wind are expected to 100 decrease 80 56% from 2016 to 2025 60 Improvements: 2025e Cost1 2021e Cost1 2016 Cost1 40 • Increasing turbine size 20 • Increasing capa
Slide 49: Portfolio Overview
Portfolio Overview Highly reliable and secured cash flows Hohe See Courseulles- Rampion Hohe See Expansion Fecamp sur-Mer Saint-Nazaire Country U.K. Germany Germany France France France Project Capacity 400 MW 497 MW 112 MW 498 MW 450 MW 480 MW ENB Share 24.9% 49.9% 49.9% 35% 42.5% 50% Primary devel
Slide 50: Our Offshore Wind Competency
Our Offshore Wind Competency Developing an integrated approach Develop Finance Construct Operate & Maintain • Leveraging and building on • Ability to finance projects • Highly experienced and • Onshore wind assets in an experienced Enbridge on-balance sheet capable major projects team operation 2.2
Slide 51: Q&A
Q&A Investment Community Update 49
Slide 52: Finance Objectives Support Strategic Priorities
Finance John Whelen Executive VP & Chief Financial Officer Finance Objectives Support Strategic Priorities Financial Strength Ready Access Ample Liquidity and Flexibility to Capital For contingencies / market Strong investment grade disruptions Diversified sources of funding credit profile Rigorous
Slide 53: Financial Strength: Low Risk Business Profile
Financial Strength: Low Risk Business Profile ~96% generated by ~93% Scale & Asset take-or-pay investment-grade Business Risk Diversity or equivalent counterparties2 Assessment Scale 2% 13% S&P Excellent Moody’s A $7.5B 50% 96% 93% 35% 2016 Pro Forma EBIT 2016 Pro Forma EBIT Q1 2017 Credit Exposure
Slide 54: Ready Access to Diversified Sources of Funds
Ready Access to Diversified Sources of Funds Funding Options (2017 – 2019) Common Equity Hybrid Entity Senior Debt Securities PIK/DRIP/ATM Follow-On Enbridge Inc. Spectra Energy Partners, LP Enbridge Energy Partners, L.P. Enbridge Income Fund / ENF Regulated Subsidiar
Slide 55: Ample Liquidity
Ample Liquidity Committed Credit Facilities (C$ Billion) 35 $30B Year-End 30 Target 25 20 $20B Committed 15 Credit Lines drawn >$14B available 10 Committed Credit Lines 5 liquidity available 0 Dec-16 Mar-17 Dec-17 Significant liquidity retained to manage through market disruptions and for other cont
Slide 56: Cost of Capital Optimization
Cost of Capital Optimization Value added Funding structure Sponsored Vehicle financing rationalization optimization • Opportunistic refinancings • Discontinue issuing from • Simplification • Utilization of hybrid securities SE Capital & MEP • Value enhancement where cost effective 9 Funding Plan Des
Slide 57: Funding the Secured Capital Program (2017-2019)
Funding the Secured Capital Program (2017-2019) Enbridge Group Funding Requirements Ample sources of alternative equity (2017e – 2019e) financing to meet additional needs $2 JV Contributions • $Alternative sources of equity capital: $10 – Spectra Energy Partners ATM $11 DRIP/ SV Equity Issuances/ De
Slide 58: Outlook beyond 2017
Outlook beyond 2017 1• Full year of 2017 projects in service Preliminary 2018 ACFFO/s Direction – $13B in service 2017 (ACFFO/Share) – 70% of capital in service in the 3 4 second half of 2017 2 2• $4B projects scheduled for 2018 in service 1 3• Incremental synergies – ~30%+ of $540 million ~$4.00 4•
Slide 59: Q&A
Q&A Investment Community Update 57
Slide 60: Investment Community Update
Enbridge Inc. Enbridge Investor Relations 3000, 425 - 1st Street S.W. investor.relations@enbridge.com Calgary, Alberta, Canada T2P 3L8 Ph: 1-800-481-2804 www.enbridge.com Investment Community Update 58