Enbridge Inc. · TSX:ENB
Enbridge — Merger or Acquisition (September 2016)
32 slides from Enbridge's merger presentation, Sep 6, 2016
Slide 1: Enbridge and Spectra Energy Combine to Create Premier Energy Infrastructure Company
Enbridge Inc. and Spectra Energy Corp Combine to Create North America’s Premier Energy Infrastructure Company Investor Presentation September 6, 2016 1 All figures presented in Canadian dollars, unless otherwise specified
Slide 2: Legal Disclaimer
Legal Disclaimer This presentation includes certain forward looking statements and information (FLI) to provide Enbridge and Spectra Energy shareholders and potential investors with information about Enbridge, Spectra Energy and their respective subsidiaries and affiliates, including each company’s
Slide 3: Highlights of Strategic Combination
Highlights of Strategic Combination Global energy Unparalleled secured Stable and predictable infrastructure leader growth program of cash flows Diversified $26+ assets and $165 Billion EV $48 Billion Billion 96% strong investment grade balance Take-or-pay and sheet in probability weighted equivalen
Slide 4: Transaction Details
Transaction Details Transaction – Based on Enbridge’s September 2, 2016 closing price of $53.25, total consideration for each Spectra share is 0.984 shares of Enbridge common stock Terms – Offer price represents a premium of approximately 11.5% to Spectra’s closing price on September 2, 2016 – Enbri
Slide 5: Compelling Benefits to Enbridge and Spectra Shareholders
Compelling Benefits to Enbridge and Spectra Shareholders Enbridge Spectra – Diversifies Enbridge to be balanced – Delivers upfront premium and participation between crude and natural gas in significant value uplift potential – “Best-in-class” assets and commercial – Intended to qualify as a tax defe
Slide 6: Right Combination; Right Time
Right Combination; Right Time Two Premium Franchises Positioning for the Future Increasing opportunities for large scale infrastructure investments Converging markets gas and liquids Changing global financial and commodity market conditions Acting proactively from positions of strength Now i
Slide 7: Best-In-Class Value Proposition
Best-In-Class Value Proposition Highest quality liquids and gas infrastructure assets in North America, all housed under one roof Largest and most secure program of diversified organic growth projects in the industry Unparalleled commercial underpinning drives highly predictable and growing ACFFO
Slide 8: The Premier North American Energy Infrastructure Asset Base
The Premier North American Energy Infrastructure Asset Base Spanning Key Supply Basins and Demand Markets Enbridge Spectra Combined Liquids pipelines (in Km) 27,600 2,720 30,320 Liquids terminals capacity (in MMbbls) 79 5 84 Gas pipelines (in Km) 24,800 140,800 165,600 Gas storage capacity (in Bcf)
Slide 9: Scale Enhances Competitive Position
Scale Enhances Competitive Position Enhances Financial Flexibility and Access to Capital North American Energy Infrastructure Canadian Listed Companies Global Energy Companies Enterprise Value ($ in billions) Market Capitalization ($ in billions) Enterprise Value ($ in billions) $600 $180 $140 $160
Slide 10: Fundamentals Support Growth and Sustainable Long Term Cash Flow
Fundamentals Support Growth and Sustainable Long Term Cash Flow Extending and diversifying growth Liquids: Highly Stable & Growing Base Cash Flows… Natural Gas: Steady Long Term Growth… … further upside optionality in an oil recovery scenario …from demand pull assets into U.S. northeast, southeast,
Slide 11: Multiple Strategic Growth Platforms
Multiple Strategic Growth Platforms Enbridge Platforms for Growth Spectra Platforms for Growth Highly predictable North North Positioned for sustained growing cash flows with American American demand-pull organic significant further growth for the Liquids Gas foreseeable future upside optionality Pi
Slide 12: Industry-Leading Growth Program – Stronger Together
Industry-Leading Growth Program – Stronger Together Pro Forma Secured Expansion Program Enjoys Unrivaled Scale ($ in billions) $26 $23 Risked 100% in execution $17 $13 $8 $6 1 Pro Forma Enbridge TRP KMI ETP EPD WMB Large Diverse Opportunity Set [xxx] ($ in billions) Major Components of Risked Capita
Slide 13: Diversifies and De-risks 2017-2019 Growth Guidance
Diversifies and De-risks 2017-2019 Growth Guidance Capital In-service 2017 – 2019 ($ in billions) $12.9 Diversity of secured growth programs by $7.0 $8.6 $0.4 – Commodity type – Expenditure profile $4.1 $8.2 $5.9 $2.6 – Geography $1.4 – Size of project 2017E 2018E 2019E Enbridge Spe ctra ~$26 billio
Slide 14: Strong Commercial Underpinning
Strong Commercial Underpinning: Maintains Enbridge’s Low Risk and Capital Discipline Low Risk Business Model Limited Commodity Price Risk Investment Grade Customers 96% of cash flow <5% of combined EBITDA is 93%2 of revenue from underpinned by long term commodity price exposed investment grade or co
Slide 15: Significant and Highly Visible Combination Synergies
Significant and Highly Visible Combination Synergies Annual Run-Rate Synergies Multiple Synergy Opportunities Full run-rate cost synergies expected to be achieved by end of 2018: Increase in purchasing power – Identifiable and achievable cost synergies; conservative estimates 13% Other costs – Poten
Slide 16: Supports, De-risks, and Enhances Current Plan
Supports, De-risks, and Enhances Current Plan $6.00 $4.50 $5.50 per share $3.80 $3.72 $3.02 2014A 2015A 2016E 2017E 2018E 2019E Based on organic secured growth only 16 (1) See appendix for definition of ACFFO.
Slide 17: Visible Organic Dividend Growth with Upside Potential
Visible Organic Dividend Growth with Upside Potential – 15% dividend increase in 20171 – 10-12% annual dividend growth from 2018 through 2024 – Conservative ACFFO payout ratio of 50-60% Extended dividend growth through: – Industry-leading growth platform and backlog – Significant scale, strength and
Slide 18: No Requirements for Follow-on Enbridge Inc. Equity
No Requirements for Follow-on Enbridge Inc. Equity Enbridge Group Funding Requirements (2017E – 19E) Ample Sources of Alternative Equity Financing Secured Capital Program $8 billion of alternative sources of equity capital (2017-19): ($ in billions) Spectra Energy Partners ATM $2 Enbridge Inco
Slide 19: Strong Investment Grade Credit
Strong Investment Grade Credit Strong Credit Metrics Increased size, scale and asset diversity significantly enhances the credit profile of the combined entity Debt/EBITDA naturally improves as high quality projects under construction are placed into service and begin generating cash flows Com
Slide 20: Peer-Leading Total Return Proposition
Peer-Leading Total Return Proposition Pro Forma Total Return vs Diversified Peers 16% Dividends 12% 13% 9% 8% 5% 9% 5% 6% 4% 6% 4% 4% 4% 4% 4% 3% 3% 3% Pro forma Nextera TransCanada Emera Sempra Enterprise Fortis Duke Hydro One Enbridge 1 Yield Growth Average total return (11%) Positioned with best-
Slide 21: Timeline to Transaction Closing
Timeline to Transaction Closing Prepare File final documents Mail proxy proxy with circulars to Shareholder Shareholder circular and securities Enbridge and Votes Votes Announcement registration commissions Spectra statement shareholders Prepare and submit regulatory Respond to filings regulator Reg
Slide 22: Key Takeaways
Key Takeaways Premier N.A. Energy Infrastructure Company Highest quality liquids and natural gas infrastructure assets in North America diversified Largest and most secure program of organic growth projects in the industry Six leading strategic growth platforms balance Ample access to capita
Slide 23: Appendix
Appendix North American Liquids Pipelines North American Gas Pipelines Utilities Canadian Midstream U.S. Midstream Renewable Power Secured Growth Program Detail Pro forma Funding Strategy Available Cash Flow from Operations 23
Slide 24: North American Liquids Pipelines
North American Liquids Pipelines Segment Highlights Our Combined Footprint – Highly competitive position with low-cost, fee-based Enbridge Spectra Combined cash flows Liquids pipelines (in Km) 27,600 2,720 30,320 Liquids terminals capacity (in MMbbls) 79 5 84 – Multiple cross border and market acces
Slide 25: North American Gas Pipelines
North American Gas Pipelines Segment Highlights Our Combined Footprint Enbridge Spectra Combined – One of the premier natural gas transportation systems in North America Long-haul gas pipelines (in Km) 3,560 27,520 31,080 Gas storage capacity (in Bcf) 115 300 415 – Existing assets serve major north
Slide 26: Utilities
Utilities Segment Highlights Our Combined Footprint Enbridge Spectra Combined – Two major North American utilities with Gas distribution customers (in MM) 2.1 1.4 3.5 significant organic growth Average base rate growth (5 years) 6% 4% 5% Gas storage capacity (Bcf) 115 160 275 – Provides a low risk c
Slide 27: Canadian Midstream
Canadian Midstream Segment Highlights Our Combined Footprint – Makes Enbridge the top player in the Montney, Duvernay and the Horn River – Opportunities for NGL pipelines – Provides critical gathering and processing services – Complementary asset base that provides take away to premium markets in th
Slide 28: U.S. Midstream
U.S. Midstream Segment Highlights Our Combined Footprint – Assets located in some of the most desirable, resource-rich basins • The largest natural gas processor and NGL producer in the U.S. • Strong positions in multiple plays including the Midcon, Permian and DJ Basin – Significant upside to a com
Slide 29: Renewable Power
Renewable Power Segment Highlights Our Combined Footprint – Renewable power assets provide stable cash flows Enbridge Spectra Combined from long term contracts with primarily government Net generating capacity (in MW) 1,800 – 1,800 offtakers – Strong fundamentals for North American and European rene
Slide 30: Combined Secured Growth Program
Combined Secured Growth Program Capital Project Segment ($ in Bn) In-service 2017: JACOS Hangingstone Liquids Pipelines $0.2 Athabasca Pipeline Twinning Liquids Pipelines 1.3 Norlite Diluent Pipeline Liquids Pipelines 0.9 Wood Buffalo Extension Liquids Pipelines 1.3 Bakken Pipeline Liquids Pipelines
Slide 31: Pro Forma Funding Alternatives
Pro Forma Funding Alternatives Common Equity Senior Notes Hybrid Entity Ratings (S&P / Moody’s / DBRS) New Issue DRIP ATM / MTN Securities ENB BBB+ / Baa2 / BBBH ENF NR / Baa2 / BBBH EEP BBB / Baa3 / BBB EPI BBB+ / NR / A EGD BBB+ / NR / A SEP BBB / Baa2 / BBB/BBB*
Slide 32: Available Cash Flow from Operations
Available Cash Flow from Operations ACFFO reconciliation Cash provided by operating activities – continuing operations (+ / –) Adjustments for changes in operating assets and liabilities 1 Adjusted cash provided by operating activities (–) Distributions to non-controlling interests (–) Preference sh