Enbridge Inc. · TSX:ENB
Enbridge — Investor Presentation (October 2012)
62 slides from Enbridge's investor presentation, October 2012
Slide 1: Investment Community Presentation
Investment Community Presentation October 2012 Investment Community Presentation 1 October 2012
Slide 2: Legal Notice
Legal Notice This presentation includes certain forward looking information (FLI) to provide Enbridge shareholders and potential investors with information about Enbridge and management's assessment of its future plans and operations, which may not be appropriate for other purposes. FLI is typically
Slide 3: Proven Investment Value Proposition
Proven Investment Value Proposition • Proven formula with substantial valuation upside Visible Growth Reliable Growing Business Income Model Stream Visible Growth – $35 Billion of investment opportunities 2012 – 2016 $18 Billion of capital to deploy on commercially secured growth projects $12
Slide 4: Significant Value Creation
Significant Value Creation Enbridge Performance Relative to S&P/TSX Index As at December 31, 2011 40% Enbridge 40% TSX Composite 30% Total Shareholder Return CAGR 20% 17% 17% 10% 7% 1% 0% -10% -9% 1 year 5 year 10 year Outperformed TSX by over 10% per year on average over the past 10 years Stron
Slide 5: Strategic Position
Strategic Position Norman Wells Zama Fort McMurray Edmonton Hardisty Quebec City Clearbrook Montreal Portland Superior Toronto Casper 2011 Toronto 2011 Chicago Salt Lake City Adjusted Adjusted Patoka Earnings Earnings Cushing 17% 16% Houston 62% 65% Liquids Pipelines Gas Distribution Wind Power Gene
Slide 6: Liquids Pipelines
Liquids Pipelines Investment Community Presentation 6 October 2012
Slide 7: Dominant Transporter of Canadian Crude Oil to the US
Liquids Pipelines Dominant Transporter of Canadian Crude Oil to the US US Imports 20121 MMbpd Western Canada 2.1 Enbridge 1.3 Other 0.8 Saudi Arabia 1.5 Mexico 1.0 Alberta Oilsands Venezuela 0.8 Fort McMurray Iraq 0.5 Edmonton Trans Mountain Enbridge Columbia 0.4 8% Hardisty transports 63% of Nigeri
Slide 8: Liquids Pipelines Current System Overview
Liquids Pipelines Current System Overview Enbridge Liquids System Alberta Clipper Southern Access Waupisoo Athabasca Pipeline North Dakota System Fort McMurray Line 9 Spearhead Seaway Edmonton Southern Lights Hardisty Kerrobert Regina Cromer Gretna Clearbrook Montreal Superior Casper Sarnia Toronto
Slide 9: New Market Access - U.S. Gulf Coast Extension
Liquids Pipelines New Market Access – U.S. Gulf Coast Extension # 3. Flanagan South Pipeline ($2.8B) • Enbridge Inc. 100% • Twin Spearhead Pipeline (36-inch pipeline, 591 miles) • Initial capacity 585 kbpd, expandable to 800 kbpd Chicago/ • In-service mid-2014 Flanagan 3 Cushing # 2. Seaway Pipeline
Slide 10: New Market Access - Eastern Extension
Liquids Pipelines New Market Access - Eastern Extension Hardisty EEP/ENB joint funded ENB funded Regina Gretna Montreal Clearbrook Superior 1 2 Westover 2 Sarnia 5 Chicago 3 Toledo 4 Patoka Cushing Total Secured Capital = $2.7 B Enbridge Inc. (60%); Enbridge Energy Partners, L.P. (40%) – $2.2B Line
Slide 11: Potential New Market Access
Liquids Pipelines Potential New Market Access Hardisty Regina Gretna Montreal Clearbrook Quebec Superior Westover Sarnia US East Coast Chicago Patoka Toledo Patoka Eastern PADD II Cushing Eastern 12 USGC Line 9 Expansion PADD I Rail Access Southern Access Extension to Patoka Eastern USGC Acc
Slide 12: New Market Access - Western Extension: Northern Gateway
Liquids Pipelines New Market Access - Western Extension Northern Gateway Pipeline • Gateway will be a world class project • Critically important to Canada, Alberta, and Energy Industry • Significant economic spin-offs, jobs and community benefits Project Details $6.0B project (excluding AEDC) 30
Slide 13: Mainline Expansion Opportunities
Liquids Pipelines Mainline Expansion Opportunities Alberta Clipper Alberta Clipper US Southern Access Fort McMurray Edmonton Hardisty Kerrobert Regina 1 Cromer Gretna Montreal 2 Clearbrook Superior 3 Sarnia Throughput Capacity Toledo Chicago Alberta Clipper Flanagan • Current = 450 kbpd Patoka Wood
Slide 14: Alberta Regional Infrastructure
Liquids Pipelines Alberta Regional Infrastructure Suncor Imperial Oil (Firebag) (Kearl) • Largest operator in Alberta Fort 4 McMurray Husky (Sunrise) • Competitive Advantage: Suncor (MacKay River) 7 5 6 Nexen (Long Lake) – Low cost expansion ConocoPhillips Cheecham Terminal – “Bridging” of new proje
Slide 15: Bakken Regional Infrastructure
Liquids Pipelines Bakken Regional Infrastructure Enbridge Mainline System • Largest operator in the Bakken Saskatchewan System (ENF) Saskatchewan North Dakota System (EEP) Bakken Expansion Project (EEP/ENF) • Competitive Advantage: Sandpiper Pipeline (EEP) – Sole gathering/collector system in Bakken
Slide 16: Gas Distribution
Gas Distribution Investment Community Presentation 16 October 2012
Slide 17: Enbridge Gas Distribution Inc.
Gas Distribution Enbridge Gas Distribution Inc. Largest Canadian gas distribution franchise 2 Million Customers – Adding 30,000 – 50,000 customers each year 2012 – 5th year under Incentive Regulation (2008-2012) – Earnings sharing mechanism – First 100 basis points of savings to Enbridge, 50/5
Slide 18: GTA Project and Continuing Favourable Risk Adjusted Returns
GTA Project • Scope - 48 km HP 36” pipe - Related facilities • Benefits - Serves growth - Increased reliability - Increased flexibility • Regulatory - File November 2012 - Decision May 2013 • In-service - Eastern section 2014 - Western section 2015 Total Secured Capital = $0.6 B Continuing Favourabl
Slide 19: Gas Pipelines & Processing
Gas Pipelines & Processing Investment Community Presentation 19 October 2012
Slide 20: Asset Positioning and Strategic Priorities
Gas Pipelines & Processing Asset Positioning and Strategic Priorities Fort St. John 1 Fort McMurray 2 7 Edmonton Regina 2 4 Toronto 4 5 Chicago 3 ENB Gas Pipelines 2 3 EEP G&P Pipelines ENB Offshore Pipelines Houston Gas Plants 6 Assets: Alliance & Vector Pipelines Contracted through 2015 - Capabl
Slide 21: Grow Canadian Midstream Business: Cabin Gas Plant
Gas Pipelines & Processing Grow Canadian Midstream Business Cabin Gas Plant • 2 x 400Mmcf/d gas treating plants in the Horn River shale • Low risk business model - Long term contracts - Take or pay - No commodity risk • Opportunity for growth • Enbridge brings construction and operating expertise To
Slide 22: Capitalize on Rich Gas Opportunities
Gas Pipelines & Processing Capitalize on Rich Gas Opportunities • Bakken (>1200 btu/cf) - Prairie Rose Pipeline - Palermo Gas Plant Palermo Gas - Tioga Pipeline Plant July 2013 target in-service - Potential to expand/extend • WCSB (1050 – 1200 btu/cf) - Increasing rich-gas connection opportunities
Slide 23: Expand NGL Value Position
Gas Pipelines & Processing Expand NGL Value Position – EEP • Texas Express Pipeline - 20” (280 kbpd capacity) - 10-Year Ship-or-Pay - In Service Q3 2013 • Strategic benefits - Addresses NGL constraints - Enhances competitive position • Integrate fee-based fractionation Total Secured Capital = $0.4 B
Slide 24: Capture Alliance and Vector Upside
Gas Pipelines & Processing Capture Alliance Upside • Unique rich gas gathering and delivery system • Attractive gas and NGL netbacks enhances Alliance value proposition vs. competition • Well positioned to capture rich gas supply growth - 1/3 of WCSB production growth within 25 miles - Direct connec
Slide 25: Capture Offshore Renaissance
Gas Pipelines & Processing Capture Offshore Renaissance After Spill, Gulf Oil Drilling Rebounds “…the U.S. Gulf of Mexico is set for an energy boom.” WSJ 09/21/2012 • Commercially Secured: - Walker Ridge Gathering In-service 2014 - Big Foot Oil Pipeline In-service 2014 - Venice Expansion In-se
Slide 26: Power, International, & Energy Services
Power, International, & Energy Services Investment Community Presentation 26 October 2012
Slide 27: Green Energy Footprint
Green Energy Footprint Enbridge Power Generation Capacity Plans MW 2,000 1,500 1,000 500 0 2005 2006 2007 2008 2009 2010 2011 2016 $1.23B of assets (highlighted) rolled down from Enbridge Inc. to Enbridge Income Fund in October 2011 to optimize capital efficiency Plant Energy Source Ow nership Ent
Slide 28: Green Energy Business Model
Green Energy Business Model Risk Category Green Energy Business Model Capital Cost Risk Fixed price EPC contracts Market Price Risk Long-term fixed price PPA’s Volume Risk Limited Counterparty Credit Risk Low – Regulated Power Authorities Operating Cost Risk Low – Fixed price O&A agreements Return o
Slide 29: International: Colombia Investment Drivers
International Colombia Investment Drivers • Supportive economic/regulatory Asian Demand Growth (Quadrillion BTU) environment and royalty structure 350 300 • Crude production growth; increasing 250 heavy slate 200 150 100 • Transportation constraints 50 0 • Asian demand growth 2011 2013 2015 2017 201
Slide 30: Energy Services and New Growth Platform Summary
Energy Services • Capitalize on low-risk physical Patoka Arbitrage Illustration arbitrage opportunities: - Producer services - Refinery supply - Storage - Quality Management - Location arbitrage • Assets: - Pipeline capacity - Storage tanks Earnings Contribution - Rail cars $ million - Truck termina
Slide 31: Finance
Finance Investment Community Presentation 31 October 2012
Slide 32: Visible Growth: Secured Investment Backlog
Investment Value Proposition – VISIBLE GROWTH Record Commercially Secured Investment Backlog Attractive secured investment opportunities of $18 billion alone drive 10% average annual EPS growth through 2016 $18 B $17 B $14 B $13 B $10 B $9 B Enbridge Day Q3 2011 Q4 2011 Q1 2012 Q2 2012 Enbridge Day
Slide 33: Business Segments Growth Capital Plan
Investment Value Proposition – VISIBLE GROWTH Business Segments Growth Capital Plan 2012 - 2016 Enterprise Wide Growth Capital Plan $ Billions 30 Risked Unsecured Highly Probable Unsecured Commercially Secured 20 10 0 Liquids Pipelines Gas Pipelines & Electric Power, Gas Distribution Processing Inte
Slide 34: An Industry Leading Growth Outlook
Investment Value Proposition – VISIBLE GROWTH An Industry Leading Growth Outlook Adjusted EPS Growth $3.00 Highly Probable Unsecured Commercially Secured • Tilted Return Projects • 2016 Risked Unsecured • New Growth Platforms • Sponsored Vehicle Drop Downs $0.00 2011 2016e 2009 EPS: $1.18 – 25% gr
Slide 35: Financial Strength & Flexibility and Funding Plan
Investment Value Proposition – RELIABLE BUSINESS MODEL Financial Strength & Flexibility Consolidated Credit Facilities & Cash * 12.6 Cash $9.5 Billion $ Billions Unutilized Capacity Available Liquidity Facility Usage 0 1 Liquidity Position as at September 14, 2012 * Includes Enbridge Inc., Energy En
Slide 36: Ample Scope for Continued Superior Dividend Growth
Investment Value Proposition – GROWING INCOME STREAM Ample Scope for Continued Superior Dividend Growth Dividend Per Share Growth Rate 15% 11% 2002 - 2012 2009 - 2012 2011 - 2016 2011-2016 dividend growth rate expected to be at least in line with EPS growth 2012 Dividend: increased 15% to $1.13
Slide 37: Summary
Summary • Exceptional array of attractive return investment opportunities • Financial risk tightly managed • Ample access to low cost conventional funding sources • Sponsored vehicles further augment access to low cost capital, accelerate growth Attractive investments low cost of capital Industry le
Slide 38: Appendix: Major Projects Execution
APPENDIX: MAJOR PROJECTS EXECUTION Investment Community Presentation 38 October 2012
Slide 39: Project Execution: A Core Competency
Project Execution: A Core Competency Sr. VP VP EPC & VP US Liquids VP US Offshore VP CDN Liquids & VP CDN Oil Sands Execution & Gas Execution Green Execution Execution Gas Distribution Execution Mainline Eastern Access Walker Ridge/Bigfoot Woodland GTA Expansion Enhancements Flanagan South Ajax Gas
Slide 40: Major Projects Capability
Major Projects Capability $400 Example Project • Control $300 - Life cycle gating control Millions $200 - Advanced cost & schedule controls $100 - Proactive risk management $0 - ELT & Board of Directors oversight Apr-10 Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13 Jul-10 Jul-11 Jul-12 Jul-13 Jan
Slide 41: Project Execution Status Update
Project Execution Status Update Expected Cost Cost Schedule Projects In-service Date ($ billion) Indicator Indicator Liquids Pipelines PH1 Q1 2013 Athabasca Capacity Expansion $0.5 Below Budget On Time PH2 Q1 2014 Athabasca Twinning $1.2 Q1 2015 On Budget On Time Bakken Program $0.6 Q1 2013 Below Bu
Slide 42: Appendix: Focus on Operations
APPENDIX: FOCUS ON OPERATIONS Investment Community Presentation 42 October 2012
Slide 43: Enbridge Pipeline Safety Track Record
Enbridge Pipeline Safety Track Record Frequency of Spills * Volume Spilled * 10.5 10.7 Barrels spilled per billion barrel-miles Including Number per billion barrel-miles Marshall 4.6 0.021 Excluding Marshall 5.9 0.005 Enbridge Industry Average Enbridge Enbridge Industry Average Rest of Industry * Ba
Slide 44: Operational Risk Management Highlights
Operational Risk Management Highlights GE UltraScan™ Duo with Phased Array Ultrasound 1. Integrity Management Dedicated VP Pipeline Integrity Major Inspection Program began Q1 2011 - Corrosion -16,300 km - Crack – 11,800 km - 75% of system inspected by Q4 2012 4th Generation Crack Inspection -
Slide 45: Appendix: Liquids
APPENDIX: LIQUIDS Investment Community Presentation 45 October 2012
Slide 46: Emerging Energy Issues in North America - Price Dislocation
Fundamentals Emerging Energy Issues in North America – Price Dislocation Asia Alberta $88 Light $109 $2 $75 WCS $13 Bakken $89 Light $113 Brent WTI $96 Light Crude $3 Heavy Crude $113 LLS Natural Gas $102 Maya Note: Pricing reflects 2012 year to date averages (October 2012) Fundamentals North Americ
Slide 47: Oil Sands Growth and Bakken Production Forecast
Fundamentals Oil Sands Growth MMbpd Forecast Western Canada Production 7.0 6.0 5.0 4.0 1.5 MMbpd 3.0 2.0 1.0 0.0 2012 2013 2014 2015 2016 2017 2018 2019 2020 Oil Sands Conventional Heavy Conv. Light and Medium Pentanes/Condensate Source: CAPP – Crude Oil Forecast, Markets & Pipelines (June 2012) Fun
Slide 48: Secured Growth Capital - Project Details
Alberta Regional Infrastructure Secured Growth Capital – Project Details Capital Full Life Upside from 3rd Return Project Expenditure In-Service Equity Capital Cost Risk Party Volumes Profile ($ millions) Return low to mid Christina Lake Expansion 250 Q3 2011 N/A Tilted Partial – Shared teens Woodla
Slide 49: Appendix: Natural Gas
APPENDIX: NATURAL GAS Investment Community Presentation 49 October 2012
Slide 50: Emerging Energy Issues in North America - Gas and NGL
Fundamentals Emerging Energy Issues in North America - Gas March 2012 Alberta Asia $2.18 $13 NA Natural Gas Production 120 100 80 60 Henry Hub 40 $2.53 20 0 2010 2015 2020 2025 CAN US Sources: Petral, PIRA Fundamentals Emerging Energy Issues in North America - NGL March 2012 $0.26 Alberta NA NGL Pro
Slide 51: North American Supply / Disposition
Fundamentals North American Supply / Disposition North American Gas Production North American Gas Disposition Bcf/d Bcf/d 120 120 100 100 80 80 Power Shale 60 60 Industrial 40 40 20 Conventional, CBM & Tight Gas 20 Res/Comm 0 0 Other 2010 2013 2016 2019 2022 2025 2010 2013 2016 2019 2022 2025 Source
Slide 52: Shale Production Forecast
Fundamentals Shale Production Forecast Supply from major North American shale plays is expected to grow by 100%+ in the next five years. 30 25 20 bcfd 15 10 5 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Barnett Fayetteville Woodford Haynesville Marcellus Horn River Montney Source: Wood
Slide 53: Appendix: Green Energy
APPENDIX: GREEN ENERGY Investment Community Presentation 53 October 2012
Slide 54: Electric Power Market Fundamentals
Electric Power Market Fundamentals North America Power Demand TWH 1% Annual Growth 6000 5000 4000 3000 2000 1000 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Nuclear Hydro Fuel Oil Coal Gas Renewables Source : Wood Mackenzie • Modest long-term elec
Slide 55: Appendix: Finance
APPENDIX: FINANCE Investment Community Presentation 55 October 2012
Slide 56: Sponsored Vehicle Strategy
Sponsored Vehicle Strategy Cash Growth Total Yield* Rate Return Enbridge Energy Partners 7% + 3% = 10% • High payout • Reliable cash flow • Low Growth 50% incentive distribution split Enbridge Inc. 3% + 10% = 13% 24% Equity Interest • Moderate payout (60-70% of earnings) 69% Equity Interest • Reliab
Slide 57: Sponsored Vehicles Earnings Growth and Credit Ratings
Sponsored Vehicles Earnings Growth Contribution ENF ENF EEP EEP 2011 2016 *Assuming no drop downs and minimal equity investment by ENB ($78 million into EEP to maintain 2% GP interest, $77 million into EIF to support organic growth) Reliable Business Model Financial Strength & Flexibility Strong Inv
Slide 58: Earnings Mix by Business Unit and Analyst Estimates
Earnings Mix by Business Unit – Adjusted Earnings Energy Services, Electric Power, International Gas Pipelines & Processing Gas Distribution 9% Liquids Pipelines 9% 10% 7% 14% 72% 17% 62% 2011 2016 ENB Analyst Estimates – October 2012 2012e Growth Target Analyst Company Rating EPS 2012e vs. 2011a Pr
Slide 59: Appendix: Other Information
APPENDIX: OTHER INFORMATION Investment Community Presentation 59 October 2012
Slide 60: Enbridge Inc. - History
Enbridge Inc. - History ENB Toronto (TSX) New York (NYSE) Established 1949 – incorporated as Interprovincial Pipe Line (IPL) 1953 – became a publicly traded company 1988 – acquired Home Oil Company Limited and was renamed Interhome Energy Inc. 1991 – Home Oil became a separate publicly traded compan
Slide 61: Non GAAP Reconciliation Earnings Per Share
Non GAAP Reconciliation Earnings Per Share $ millions 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 Reported Earnings 991 963 1,555 1,321 700 616 556 645 667 566 458 Adjusting Items 119 21 (700) (644) (64) (23) (19) (154) (172) (148) (76) Adjusted Earnings 1,110 984 855 677 636 593 537 491
Slide 62: Investment Community Presentation October 2012
Investment Community Presentation October 2012 62