Slide 1: Second Quarter 2017 Financial Results and Strategic Update
Second Quarter 2017 Financial Results and Strategic Update August 3, 2017 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 Partne
Slide 3: Agenda
Agenda Valley Crossing Pipeline • Q2 financial highlights Construction • Business update • Financial results • Mid-year review 3
Slide 4: Q2 Financial Highlights - Enbridge Inc.
Q2 Financial Highlights - Enbridge Inc. First full quarter of combined operations Adjusted EBIT ($ Millions) ACFFO ($ Millions, except per share amounts) $1,713 Q2 $1,324 Q2 $1,089 $868 $1,374 $1,515 Q1 $1,114 $1,215 Q1 2016 2017 2016 2017 Q2: $0.95/ share $0.81/ share YTD: $2.21/ share $1.81/ share
Slide 5: Advancing Line 3 Replacement
Advancing Line 3 Replacement Critical project providing increased system capacity • Beginning construction on certain segments in Line 3 Replacement Edmonton Canada and Wisconsin Hardisty • Updated capital costs of C$5.3B and US$2.9B Kerrobert – 9% increase over 2014 sanctioned costs Regina Complete
Slide 6: Mainline - Potential Future Expansions
Mainline – Potential Future Expansions Low cost, highly executable, staged expansions to match supply Incremental Capacity 2019 Capacity (KBPD) +500 System DRA Optimization +75 kbpd BEP Idle* +100 Incremental Capacity 2019+ Superior System Station Upgrades +100 Line 4 Capacity Restoration +75 Line 1
Slide 7: Enterprise-wide Secured Growth Project Inventory
Enterprise-wide Secured Growth Project Inventory $31B of diversified low-risk projects Project Expected ISD Capital (C$B) Project Expected ISD Capital (C$B) Regional Oil Sands Optimization, Wynwood 1H18 0.2 CAD Athabasca Twin in service 1.3 CAD Valley Crossing Pipeline 2H18 1.5 USD Jackfish Lake in
Slide 8: Project Execution
Project Execution Select project updates Liquids: AB Clipper (L67) Natural Gas: NEXUS Natural Gas: Valley Crossing TX Texas Eastern Nueces Valley Crossing Pipeline Brownsville Mexico • Draft Amended EIS issued • Commercial agreements in place • Vast majority of permits received • Inter-agency consul
Slide 9: Recently Secured Growth Projects
Recently Secured Growth Projects $3.6 billion of attractive organic expansions Hohe See Offshore Wind & Spruce Ridge: $0.5B T-South Expansion: $1.0B Expansion: $2.1B DENMARK BC Station 2 Aitkin Creek Plant BC Hohe See McMahon Hohe See Plant Expansion 112MW Station 2 T-South 497MW Hohe See AB Vancouv
Slide 10: Sponsored Vehicles Review
Sponsored Vehicles Review Important to business objectives and strategy • Strong sponsor support • Q2 financial performance in line with expectations, on track for annual guidance • Committed to the financial strength and stability of the vehicles • Well-positioned for success with clear and attract
Slide 11: Q2 2017 Consolidated Adjusted EBIT Performance
Q2 2017 Consolidated Adjusted EBIT Performance Liquids Pipelines Adjusted EBIT (C$ Millions) 2Q16 2Q17 Higher throughput vs 2016 Liquids Pipelines 922 938 • Unexpected third-party outages & Line 5 hydrostatic testing Gas Pipelines and Processing 90 667 • Higher apportionment on Mainline impacting G
Slide 12: Q2 2017 Consolidated ACFFO Performance
Q2 2017 Consolidated ACFFO Performance (C$ Millions) 2Q16 2Q17 Consolidated Adjusted EBIT 1,089 1,713 2Q17 vs. 2Q16 ACFFO Analysis Depreciation and amortization 555 868 ACFFO Adjusted EBIT drivers noted in previous slide Maintenance capital (144) (374) • Increased net cash items as a result of Inte
Slide 13: 2H 2017 Outlook
Financial Guidance Affirmed 2017 ACFFO/Share of $3.60 to $3.90 2H 2017 Outlook ACFFO per Share Adjusted EBIT $ Millions • Stronger Liquids Pipelines performance $3.60 - $3.90 $7,200 - $7,600 • New projects coming into service • Additional synergy realization • Improved FX hedging rates1 ACFFO expect
Slide 14: Financial Guidance Affirmed
Financial Guidance Affirmed Drivers of accelerated ACFFO growth through 2H17 Mainline volumes strengthen Consolidated FX hedging program 100% $1.20 Ex-Gretna (MMbpd) 80% Hedge % 75% 75% $1.15 Hedge Rate 2.6 2.4 50% $1.10 25% $1.05 0% $1.00 1Q17a 2Q17a 3Q17e 4Q17e 1H17 2H17 Cost synergies realized Pr
Slide 15: ENF & Fund Group: Q2 2017 Financial Summary
ENF & Fund Group: Q2 2017 Financial Summary (C$ millions, except per share amounts) 2Q16 2Q17 FY 2017 Guidance 2Q17 vs. 2Q16 Fund Group ACFFO Analysis Fund Group ACFFO 383 501 $1,900 - $2,100 Higher residual toll on the Distributions Paid 402 402 - Canadian Mainline Payout Ratio 105% 80% 80%-90% •
Slide 16: Spectra Energy Partners: Q2 2017 Financial Summary
Spectra Energy Partners (SEP): Q2 2017 Financial Summary (US$ millions, except per unit amounts) 2Q16 2Q17 FY 2017 Guidance 2Q17 vs. 2Q16 DCF Analysis Ongoing EBITDA 448 548 - Higher due to expansion projects Ongoing Distributable Cash Flow 281 371 $1,400 - $1,480 • Lower maintenance capex Distribu
Slide 17: Enbridge Energy Partners: Q2 2017 Financial Summary
Enbridge Energy Partners (EEP): Q2 2017 Financial Summary (US$ millions, except per unit amounts) 2Q16 2Q17 2017 Guidance2 2Q17 vs. 2Q16 DCF Analysis Adjusted EBITDA $489 $397 $1,580-$1,680 Stable performance of Lakehead system Distributable Cash Flow $263 $183 $700 - $750 • Expiration of Phase 5 a
Slide 18: Enterprise-Wide Funding Plan
Enterprise-Wide Funding Plan Significant funding activities in second quarter bolsters balance sheet and enhances liquidity Enbridge Financing Execution Enbridge Group Funding Requirements C$ Billion 1 YTD 2017 3 Years (2017e – 2019e) Equity Funding2 ENB Common Shares (DRIP) $0.5 Ample Alternative $
Slide 19: Mid-Year Checkpoint
Mid-Year Checkpoint Great progress so far in 2017 Spectra transaction closed Integration, synergy capture progressing well Dividend increased 15% 2017 outlook on track Bolstered financial strength and flexibility Sponsored Vehicle streamlining actions complete Mid-year investor update 19
Slide 20: 2Q Takeaways
2Q Takeaways Executing the plan On track for 2017 guidance Line 3 replacement to begin in Canada and Wisconsin $13B projects in service in 2017 Sponsored Vehicle results as expected; low risk value propositions in place Significant progress year-to-date on executing the business plan 20
Slide 21: ENBRIDGE
ENBRIDGE
Slide 22: Enbridge Income Fund Holdings Inc. Supplemental Slides
Enbridge Income Fund Holdings Inc. Second Quarter 2017 Supplemental Slides Investor Relations Adam McKnight 403-266-7922 | adam.mcknight@enbridge.com
Slide 23: Fund Group: Available Cash Flow from Operations
Fund Group: Available Cash Flow from Operations (C$ Millions) 2Q16 2Q17 Liquids Pipelines 316 373 Gas Pipelines 47 43 Green Power 35 42 Eliminations and Other 8 14 Adjusted earnings before interest and tax 406 472 Depreciation and amortization 158 164 Cash distributions received in excess of/(less t
Slide 24: Fund Group 2017 Outlook
Fund Group: 2017 Outlook (as presented February 17, 2017) Fund Group 2017 ACFFO Secured Growth Projects in Execution C$ millions PROJECTS EST. COST ($B) $2,100 JACOS Hangingstone $0.2 Norlite Diluent Pipeline 2017 $1,900 $0.9 Regional Oilsands Optimization $2.6 Athabasca Pipeline Twin • Wood Buf
Slide 25: Fund Group: Key Balance Sheets Metrics & Funding Progress
Fund Group: Key Balance Sheets Metrics & Funding Progress April 2016 06/30/17 $0.6B Consolidated Fund Group Leverage 42.6% ENF common share offering Consolidated Fund Group Debt/EBITDA 5.8x December 2016 Enbridge Income Fund Credit Ratings Baa2 / BBB (High)(2) Enbridge Pipelines Inc. Credit Ratings
Slide 26: Dividend per Share Growth Beyond 2019
Significant Dividend Income Dividend per Share Growth Beyond 2019 2014 – 2019e • Low cost, phased expansions of $2.50 the Mainline • Alliance pipeline expansion $2.00 $2.05 $1.87 – Expression of interest underway $1.50 $1.59 • Right of first offer with ENB on $1.40 growth within existing asset $1.00
Slide 27: Investor Value Proposition
Investor Value Proposition Premier Canadian Energy Infrastructure Income Investment Outstanding Low risk Visible growth Strong sponsor asset footprint business model • High quality, strategically • Minimal commodity price • 10% annual DPS growth • Aligned with ENF positioned Canadian and throughput
Slide 28: Spectra Energy Partners Supplemental Slides
Spectra Energy Partners Second Quarter 2017 Supplemental Slides Investor Relations Roni Cappadonna 713-627-4778 | Roni.Cappadonna@enbridge.com
Slide 29: Spectra Energy Partners: Ongoing Distributable Cash Flow
Spectra Energy Partners: Ongoing Distributable Cash Flow (US$ Millions) 2Q16 2Q17 US Transmission 412 497 Liquids Other 58 (22) 65 (14) 9+ years of consecutive quarterly Ongoing EBITDA 448 548 distribution increases ADD: Earnings from equity investments (30) (40) Distributions from equity investment
Slide 30: Spectra Energy Partners: Key Balance Sheets Metrics
Spectra Energy Partners: Key Balance Sheets Metrics 06/30/17 Total Debt $7.9B Financial Covenant Metrics 4.1x Debt/EBITDA(1) Credit Ratings Baa2 / BBB+ / BBB(2) Available Liquidity $1.3B (1) Calculated in accordance with the credit agreements; max 5.0x (2) Moody’s / S&P / Fitch senior unsecured rati
Slide 31: $4+B Projects in Execution, ~75% Demand Pull
$4+B Projects in Execution, ~75% Demand Pull Continue to pursue development projects Est. CapEx In-Service Counterparties (USD $MM) Sabal Trail In-Service ~1,600 Gulf Markets – Phase II In-Service 110 2017 Access South, Adair Southwest & Lebanon Extension 2H17 450 Atlantic Bridge 2H17 – 2H18 500 NEX
Slide 32: Investor Value Proposition
Investor Value Proposition Stable. Disciplined. Reliable. We go “where the lights are” – connecting diverse supply basins with regional demand markets – “last mile” competitive advantage Attractive Stable Outstanding Prudent financial distribution business model asset footprint management growth • P
Slide 33: Enbridge Energy Partners Supplemental Slides
Enbridge Energy Partners Second Quarter 2017 Supplemental Slides Investor Relations Adam McKnight 403-266-7922 | Adam.McKnight@enbridge.com
Slide 34: Enbridge Energy Partners: Adjusted EBITDA to Distributable Cash Flow
Enbridge Energy Partners: Adjusted EBITDA to Distributable Cash Flow 2Q16 2Q17 (US$ Millions) Adjusted EBITDA 489.3 396.6 Interest Expense (Net)1 (93.3) (104.0) Income Tax Expense (2.5) 1.1 Distributions in excess of/(less than) equity earnings 1.2 (0.7) Maintenance capital expenditures (11.6) (6.8)
Slide 35: EEP Unit Structure
EEP Unit Structure as of June 30, 2017 (Millions of units) Unit Class1 ENB5 Public TOTAL Cash Paying LP units2 A 110.8 215.7 326.5 B 7.8 - 7.8 E 18.1 - 18.1 EEQ PIK Shares4 10.0 75.6 85.6 Incentive units – Class F6 - - - TOTAL 146.7 291.3 438.0 Economic Interest 3 34.8% 65.2% (1) Does not include 2%
Slide 36: Significantly Enhanced Balance Sheet
Significantly Enhanced Balance Sheet Committed to strong investment-grade credit rating Sources & Uses of Transaction Proceeds1 Consolidated Debt/EBITDA2 (2017-2020) (US$B) As presented April 28, 2017 6.0x Sources Uses ~5.3x ~5.3 Line 3 Step Down $0.45 EA Step Up $(0.36) 5.0x 4.5x Class A Proceeds 1
Slide 37: 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)* Customers ~96% ~100% <1% of cash flow underpinned of revenue from of cash flow directly by long term cost of service or investment grade
Slide 38: DCF/unit Growth Outlook
DCF/unit Growth Outlook (as presented April 27, 2017) Embedded growth supports longer term distribution growth Embedded Growth Opportunities (DCF/unit) $1,600 • ~3% secured DCF/unit growth to 2020 $1,400 L3 call option – Southern Access to 1,200MMbpd BPL call option ME call option – Eastern Access +
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 •