Enbridge Inc. · TSX:ENB
Enbridge — Merger or Acquisition (September 2023)
22 slides from Enbridge's merger presentation, Sep 5, 2023
Slide 1: U.S. Gas Utilities Acquisition
U.S. Gas Utilities Acquisition September 5, 2023 Greg Ebel President & CEO Pat Murray EVP & CFO
Slide 2: Legal notice
Legal notice Prospectus A final base shelf prospectus of Enbridge Inc. dated September 5, 2023 containing important information relating to the securities described in this document has been filed with the securities regulatory authorities in each of the provinces of Canada. A copy of the final base
Slide 3: Transaction Overview
Transaction Overview • Enbridge to acquire three premier Gas Utilities from Dominion Energy • Creates North America’s largest gas utility platform; delivering ~9.3 bcf/d to ~7 million customers • All cash transaction for aggregated purchase price of CAD$19B1 (includes ~CAD$6B of assumed regulated Op
Slide 4: Agenda
Agenda Strong Total Return • Value Proposition • Unique Asset Acquisition • Enhances Diversification • Growth Outlook Predictable Low-Risk Cash Flow Business • Financing Plan Growth First-choice Energy Provider 4
Slide 5: Accretive to Enbridge's Value Proposition
Accretive to Enbridge’s Value Proposition Enbridge’s Value Drivers U.S. Gas Utilities Acquisition Diversified Low-Risk Accelerates Scale & Breadth of Stability Pipeline / Utility Model Existing Low-risk Utility Model Reliable Cash Flows & Improves Cash Flow Quality Strength Strong Balance Sheet and
Slide 6: Unique Asset Acquisition
Unique Asset Acquisition • Rare opportunity to acquire high-quality, growing natural gas utilities of scale for CAD$19B1 • Creates North America’s largest natural gas utility platform delivering ~9.3 Bcf/d to ~7.0 million customers Questar5 • Historically attractive acquisition multiple of ~1.3x2 EV
Slide 7: Assets in Premier Jurisdictions
Assets in Premier Jurisdictions Public Service East Ohio Gas Questar Gas Investment Highlights Company of North Company Company1 Carolina Access to Major Regulatory: constructive Demand Centers ROEs and equity thickness Projected Population Growth2 0.5% 5.0% 3.7% Growth: diverse low-risk growth
Slide 8: Further Enhances Diversification
Further Enhances Diversification Enhances commercial profile with increased Business regulated cash flow Mix (2023e EBITDA1) 25% 28% Liquids Pipelines Gas Transmission 57% 22% 98% of EBITDA1 50% Gas Distribution 12% 100% Renewable Power generated by low-risk businesses 3% 3% Post acquisitions Adj. E
Slide 9: Strengthens Gas Distribution Segment
Strengthens Gas Distribution Segment Creates First-Choice Gas Distribution Segment by Jurisdiction Natural Gas Utility Franchise (Post acquisitions Adjusted EBITDA1) in North America Ontario | Ohio | Utah/Wyoming/Idaho | North Carolina | Quebec 1% ~9.3 Bcf/d gas delivered 1% 10% ~7.0 million cus
Slide 10: Strong Operational Track Record
Strong Operational Track Record Enbridge Gas Distribution & Storage EOG, Questar, PSNC ~175 years of experience delivering gas to Strong operational teams with decades customers of experience Operational, customer service, optimization, Safety is a core value and safety excellence Pipeline integrity
Slide 11: Successful Business Integration Track Record
Successful Business Integration Track Record 1949 Post Acquisitions Single Purpose Crude Oil Pipeline Diversified Energy Delivery Company 2017 2022 Merged with Acquired operatorship of ~$18B Gray Oak Pipeline 2023 Post acquisitions 2002 2021 Acquired Adj. EBITDA2 Acquired Acquired the Tres Palacios
Slide 12: Enhanced Low-Risk Growth Platform
Enhanced Low-Risk Growth Low-Risk Capital Platform Utility capex represents ~$5B of short-cycle capital over 3 years Secured Capital Program ~40% ($B by Business Segment) of post acquisitions Gas-friendly jurisdictions with Gas Distribution | Gas Transmission | Liquids Pipelines | Renewables sec
Slide 13: Further De-risks Growth Outlook
Further De-risks Growth Outlook ~2% ~5% CAGR Deploying Investment ~1-2% Capacity Secured • Robust Opportunity Set • Tuck-in M&A ~1-2% Organic Growth – Gray Oak (+10%) • Western Canadian Pipeline – Tres Palacios Optimizations & Expansions Toll Escalators – Aitken Creek • Woodfibre LNG • U.S. Gas Util
Slide 14: Flexible and Highly Executable Financing Plan
Flexible and Highly Executable Financing Plan Purchase Price $19B Future Funding • Ongoing capital recycling • Dividend Reinvestment Plan Options • ATM Program Hybrids1 / Bonds Concurrent Equity Issuance Longer-term Sources Acquired Utility OpCo Debt Near-term Uses Sources Concurrent equity issuance
Slide 15: Maintaining Strong Investment Grade Credit Metrics
Maintaining Strong Investment Enhances Business Risk Profile Grade Credit Metrics Increased scale Post acquisitions Debt/EBITDA1 Enhanced cash flow Target Range: 4.5x – 5.0x diversification • Prudent financing plan maintains leverage well Supportive regulatory within management’s 4.5- regimes
Slide 16: Regulatory Approval Next Steps
Regulatory Approval Next Steps 2024 • Hart-Scott-Rodino Federal Approvals • Federal Communications Commission Sept 5, 2023 • Committee on Foreign Investment in the U.S. ENB Regulatory Announces Review Acquisitions Process • Public Utilities Commission of Ohio of U.S. Gas (Begins within 30 Days) Util
Slide 17: Key Takeaways
Key Takeaways Historically rare opportunity to acquire high quality, growing U.S. natural gas Strong Total utilities of scale at an attractive value Return Diversifies and lowers business risk by enhancing utility cash flow profile Enhances premium growth profile while maintaining balance sheet stre
Slide 18: Appendix
Appendix
Slide 19: The East Ohio Gas Company
The East Ohio Gas Company Cleveland Asset Overview • East Ohio Gas Company (EOG) is a single-state, fully regulated gas utility serving >1.2MM customers across >400 communities in Ohio • Owns 22,000 miles of transmission, gathering and distribution pipelines and 60 BCF of storage • Has >40 interconn
Slide 20: Questar Gas Company
Questar Gas Company Salt Lake City Asset Overview • Questar distributes natural gas in Utah (~97% of rate base), Southwestern Wyoming (~3%), and a small portion of Southeastern Idaho • Owns 21,000 miles of transmission, gathering and distribution pipelines serving ~1.2MM customers • Operates in prem
Slide 21: Wexpro – Regulated Gas Supply for Questar
Wexpro – Regulated Gas Supply for Questar Wexpro Traditional Risk Profile: Risk Category Model E&P Model Commentary Low Medium High Wexpro must demonstrate that new capital exceeds minimum return thresholds Exploration & before being approved. Once wells are deemed economic, all capital is added to
Slide 22: Public Service Company of North Carolina
Public Service Company of North Carolina Durham Asheville Asset Overview Raleigh • Public Service Company of North Carolina (PSNC) is a single-state, fully Gastonia regulated gas utility in North Carolina serving several premier cities • Owns 13,000 miles of transmission, gathering and distribution