Slide 1: 2016 Second Quarter Financial & Strategic Update
2016 Second Quarter Financial & Strategic Update Q2 Earnings Call 29 July 2016 Al Monaco, President & CEO John Whelen, Executive Vice President & CFO
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 its subsidiaries and affiliates, including management’s assessment of Enbridge and its subsidiaries’ future plans and operati
Slide 3: Agenda
Agenda • The Enbridge value proposition • Business update • Second quarter financial review SLIDE 3
Slide 4: Wildfire Update
Wildfire Update • Minimal physical damage to Alberta Wildfires regional oilsands facilities ─ Returned to full service • May & June Mainline volume impact: 255 kbpd • Q2 financial impact: ─ Adjusted EBIT*: $74 million ─ ACFFO* per share: $0.08 ─ Adjusted EPS*: $0.03 • Transitory volume impact ─ Augu
Slide 5: Financial Highlights
Financial Highlights Strong results reflect resiliency of business model; guidance range unchanged Adjusted EBIT1 ACFFO1 Adjusted Earnings1 $ Millions $ Millions, except per share $ Millions, except per share amounts amounts +$74* $1,089 +$26* Q2 +$74* $456 $1,049 $868 Q2 Q2 Q2 $505 $808 Q2 Q2 $1,37
Slide 6: Shareholder Value Proposition
Shareholder Value Proposition Reliable Business Model Dividend Per Share 14% DPS CAGR (2006 – 2016) Conservative Commercial Structures ● Minimal Commodity Exposure ● $2.12 Disciplined Capital Allocation + Industry Leading Growth Strategic Asset Positioning ● Strong Fundamentals ● Extend & Diversify
Slide 7: Low Risk Business Model
Low Risk Business Model Provides strong and predictable results in all environments 95% of cash flow 95% of credit exposure ~80% of Mainline <5% of earnings subject to underpinned by strong, from investment grade revenue is generated by market price risks including long term commercial customers or
Slide 8: Secured Growth Outlook
Secured Growth Outlook Transparent growth outlook driven by strong base business and $26 billion secured growth capital program Secured Capital Program ACFFO* DPS Dividend Coverage Projects in service 2015-2019 12-14%+ CAGR 10-12%+ CAGR ~2x $26B $2.12 $16B $3.02 $10B ENB Source: Projects in Executio
Slide 9: Secured Growth Drivers: Project Execution
Secured Growth Drivers: Project Execution Supports growth outlook of 12 - 14% ACFFO/Share CAGR through 2019 Projects in Execution1 Project Capital Cost Expected ISD • $1.8B of capital placed into 2016 Heidelberg Lateral $0.1B Complete service this year GTA Project $0.9B Complete Tupper Gas Pla
Slide 10: Secured Growth Drivers: Tilted Returns
Secured Growth Drivers: Tilted Returns Contributes to growth through 2019 and beyond Tilted Return Capital in Service Illustrative Tilted Return Profile ACFFO/share* $25B ~3% embedded annual growth 10 20% Equivalent full 8 life DCFROE 15% “ tilted ” 6 10% “ flat ” 4 5% 2 0 0% 2013 2014 2015 2016 201
Slide 11: Capital Optimization & Cost Management
Capital Optimization & Cost Management Capital Regional Oil Sands Optimization Cost Reductions* at Midcoast (USD millions) • Supply chain initiatives $400 • Regional Oil Sands Optimization ~20% $350 decline Cost Management $300 • Midcoast $250 • Alliance $200 • Enterprise wide measures $150 $100 Twe
Slide 12: WCSB Growth Outlook
WCSB Growth Outlook Focused on addressing WCSB capacity shortfall Incremental WCSB Blended Heavy Takeaway Capacity vs. Supply Outlook Supply Growth (mmbpd) 700 (cumulative kbpd) 6 Near term 600 optimization: 5 +60 – 80 kbpd 500 4 400 3 Enbridge 300 2 200 Other Existing Pipelines 1 100 Western Canadi
Slide 13: Liquids Pipelines: Positioned for Growth Beyond 2019
Liquids Pipelines: Positioned for Growth Beyond 2019 Regional Oil Sands Projects Regional Oil Sands Projects Western Canadian Expansion Projects Scalable, incremental and highly executable Western Canadian Pipeline Description Capacity Execution Comments Expansion Projects (kbpd) Line 3 Restore 400
Slide 14: Extend and Diversify Growth
Extend and Diversify Growth $7B in new opportunities since Enbridge Day 2015 Gas Pipelines & Processing Power Tupper acquisition $0.5B New Creek $0.2B Further expansion opportunities $1.0B Rampion $0.8B $1.5B Investment in EMF $4.8B (includes projects under development) $5.8B Commercial Agreement: 2
Slide 15: Acquisitions: Investment Criteria
Acquisitions: Investment Criteria Consistent with value proposition • Solid long term fundamentals • Strong commercial / contractual support • Attractive risk-adjusted returns Aligned with strategy • Creates or strengthens existing or new platforms Long term • Brings embedded growth or optionality s
Slide 16: Attractive Investment Opportunity
Attractive Investment Opportunity Dividend Yield Dividend per Total Return • Low risk business model Share Growth 2016e DPS CAGR 2016e-2018e Annual 2016e-2018e • Executing capital program 10 - 12% 14 - 16% • Transparent ACFFO growth • Extending & diversifying growth beyond 2019 ~4% • Strong investme
Slide 17: Q2 2016 Segmented Adjusted EBIT Variance
Q2 2016 Segmented Adjusted EBIT Variance ADJUSTED EBIT ($ MILLIONS) Q2 2015 Q2 2016 Variance Liquids Pipelines 809 922 +113 Gas Distribution 96 73 (23) Gas Pipelines and Processing 74 90 +16 Green Power and Transmission 43 40 (3) Energy Services 78 47 (31) Eliminations and Other (51) (83) (32) Conso
Slide 18: Q2 2016 ACFFO Variance
Q2 2016 ACFFO* Variance Favourable operating performance partially offset by higher financing costs ($ MILLIONS) Q2 2015 Q2 2016 Variance Consolidated Adjusted EBIT* 1,049 1,089 +40 Depreciation and amortization 485 555 +70 Maintenance capital (164) (144) +20 Interest expense (291) (363) (72) Curren
Slide 19: 2016 Adjusted EBIT & ACFFO Guidance
2016 Adjusted EBIT* & ACFFO* Guidance Performance on track; no change to guidance Adjusted EBIT* ACFFO*/share $4.8B $4.50 $4.4B $3.80 $3.72 $3.02 2016e 2014 2015 2016e *Available cash flow from operations (ACFFO) and adjusted earnings before interest and tax (adjusted EBIT) are non-GAAP measures. Fo
Slide 20: ENF & Fund Group Q2 Results
ENF & Fund Group Q2 Results Strong growth driven by 2015 drop down and solid performance from legacy assets ($ MILLIONS, Except per share amounts) Q2 2015 Q2 2016 Variance EIPLP ACFFO* 112 437 +325 Fund and ECT operating, administrative and interest expense (30) (54) (24) Fund Group ACFFO* 82 383 +3
Slide 21: ENF & Fund Group 2016 Guidance
ENF & Fund Group 2016 Guidance Performance on track; no change to guidance ENF Dividends Per Share Fund Group ACFFO* $2.50 $2.05B $2.00 $1.87 $1.75B $1.50 $1.00 $0.50 $0.00 2014 2015 2016 … 2019e 2016e *Available cash flow from operations (ACFFO) is a non-GAAP measure. For more information on non-GA
Slide 22: Financial Strength and Flexibility
Financial Strength and Flexibility Over $4 Billion in new capital raised thus far in 2016; Bolsters balance sheet and further strengthens liquidity position Financing Activity Available Liquidity3 2016 Year to Date $ Billions $ billions (1 USD = 1 CAD) Primary Market 12 Equity Funding1 ENB Common Sh
Slide 23: Funding Progress
Funding Progress Equity raised in 2016 more than sufficient to fund commercially secured growth through 2017 Secured Capital Funding Requirement (2015 – 2019) Remaining Funding Requirements Nominal dollars (billions) 2016 – 2019 ($ billions) 40 Equity requirement $0.8B 35 Maintenance 30 & Integrity
Slide 24: Credit Ratings
Credit Ratings Committed to strong, investment grade credit ratings Credit improve strongly as greenfield Solid, investment grade ratings across issuers projects come into service 20% FFO to Debt EPI EGD ENB FUND EEP BBB BBB DBRS A A (High) (High) BBB Outlook Stable Stable Stable Positive Stable Moo
Slide 25: Q&A
Q&A