CALGARY, ALBERTA--October 30, 2003 - Enbridge Inc. today
announced earnings applicable to common shareholders of $639.9
million for the nine months ended September 30, 2003, or $3.87
per share, compared with $542.5 million, or $3.42 per share, for
the same period in 2002.
Earnings for the three months ended September 30, 2003 are $90.7
million, or $0.54 per share, compared with a loss of $3.9
million, or $0.03 per share, for the same period in 2002.
The 2003 results include a $169.1 million gain on the transfer of
assets to Enbridge Income Fund (EIF), whereas the prior year
reflected a $240.0 million gain on the sale of the retail
services business, both after-tax and recorded in the respective
second quarters. The third quarter of 2002 included a $76.3
million after-tax writedown of the Enbridge Midcoast Energy
assets. Excluding these gains and the writedown, earnings have
improved significantly from the prior year. This is primarily a
result of higher natural gas volumes on the gas distribution
system due to colder than normal weather, higher earnings from
additional interests in the Alliance Pipeline and higher earnings
on the Enbridge crude oil system following the Terrace expansion.
Enbridge President & Chief Executive Officer Patrick D. Daniel
noted, "The third quarter again highlights Enbridge's ability to
generate consistent and sustained earnings growth from its low
risk infrastructure asset base. Earnings per share for the nine
months, after excluding significant non-recurring factors, are
higher by approximately 8% on a year over year basis. Looking
forward, robust continental energy demand fundamentals and
increasing energy supply from Canada will support continued
growth. Enbridge is positioned to benefit from these fundamentals
and has a significant inventory of new projects that are in
various stages of development."
On October 30, 2003, the Enbridge Board of Directors declared
quarterly dividends of $0.415 per common share and $0.34375 per
Series A Preferred Share. Both dividends are payable on December
1, 2003 to shareholders of record on November 14, 2003.
The Company has previously provided guidance for full year 2003
earnings per common share of $2.80 - $2.90, excluding significant
non-recurring factors. The Company expects full year 2003
earnings per common share in the lower half of that range.
--------------------------------------------------------------------Consolidated Earnings/(Loss)-------------------------------------------------------------------- Three months Nine months ended ended(millions of Canadian dollars) September 30, September 30,-------------------------------------------------------------------- 2003 2002 2003 2002 --------------------------------------Energy Transportation North 78.4 61.7 395.4 182.9Energy Transportation South 7.1 (60.2) 31.8 (38.6)Gas Distribution and Services 6.3 (1.9) 209.2 137.3International 17.9 16.4 52.1 50.4Corporate (19.0) (19.9) (48.6) (31.8) -------------------------------------- 90.7 (3.9) 639.9 300.2Discontinued Operations - - - 242.3 -------------------------------------- 90.7 (3.9) 639.9 542.5 -------------------------------------- --------------------------------------
Significant non-recurring factors and variances affecting
consolidated earnings are as follows:
- Energy Transportation North includes a $169.1 million after-tax
gain on the sale of assets to Enbridge Income Fund (EIF) recorded
in the second quarter of 2003.
- Energy Transportation South included a $76.3 million after-tax
writedown of the Enbridge Midcoast Energy assets recorded in the
third quarter of 2002.
- Energy Transportation South includes a $9.2 million dilution
gain on an Enbridge Energy Partners, L.P. (EEP) unit issuance in
the second quarter of 2003, whereas the prior year included a
$6.1 million dilution gain in the first quarter.
- Gas Distribution and Services includes the positive effect of
colder than normal weather of $44.2 million in 2003, including
$2.5 million in the third quarter. In the nine months ended
September 30, 2002, warm weather negatively affected earnings by
$29.4 million; however, during the third quarter weather was
colder, which increased earnings by $10.0 million. The positive
weather effect in 2003 is partially offset by a $7.1 million
regulatory disallowance related to a prior year and recorded in
the first quarter of 2003.
- Corporate included a $17.8 after-tax million gain on a sale of
marketable securities recorded in the first quarter of 2002.
- The second quarter of each year includes the effect of the
Alberta 0.5% tax rate reductions. The 2003 results also include
the effect of a higher federal future tax rate since federal
surtax will apply when large corporations tax is eliminated.
These tax rate changes result in a $7.1 million net charge to
earnings in the second quarter of 2003 compared with a net
recovery of $1.4 million in the comparable period of the prior
year.
- Discontinued operations included a $240.0 million after-tax
gain on the sale of the retail energy services business in 2002.
Operating factors that enhance earnings in 2003 include the
additional ownership interest in Alliance, Terrace Phase III,
which was placed into service April 1, 2003, improved results
from gas service activities and higher earnings from EEP and CLH
of Spain. These positive factors are partially offset by the
absence of earnings from Enbridge Midcoast Energy, sold to an
affiliate of Enbridge in October 2002, and an increased loss from
Aux Sable.
--------------------------------------------------------------------Energy Transportation North-------------------------------------------------------------------- Three months Nine months ended ended(millions of Canadian dollars) September 30, September 30,-------------------------------------------------------------------- 2003 2002 2003 2002 --------------------------------------Enbridge System 43.2 33.9 113.5 102.2Athabasca System 12.1 11.1 35.2 30.6NW System 2.1 2.7 6.2 7.1Saskatchewan System - 1.6 3.1 4.9Alliance Pipeline (US) 9.3 4.5 27.0 13.8Alliance Pipeline (Canada) - 4.7 19.6 15.2Vector Pipeline 1.7 2.6 6.0 5.0Enbridge Income Fund 7.5 - 7.5 -Other 2.5 0.6 8.2 4.1 -------------------------------------- 78.4 61.7 226.3 182.9Gain on sale of assets to Enbridge Income Fund - - 169.1 - -------------------------------------- 78.4 61.7 395.4 182.9 -------------------------------------- --------------------------------------
- Enbridge System earnings include incremental earnings from
Terrace as Phase III was placed into service on April 1, 2003. To
a lesser degree, the timing of operating and maintenance expenses
also favourably impacted earnings in the third quarter of 2003.
- Higher earnings from the Athabasca System are primarily the
result of the completion of additional facilities and tankage.
- Alliance Pipeline (US) earnings reflect the additional
ownership interests of 15.7% acquired in the fourth quarter of
2002, 1.1% in March 2003 and 11.8% in April 2003, of which 1.1%
is expected to close in the fourth quarter of 2003.
- Vector earnings reflect increased volumes due to both colder
than normal weather in eastern Canada and higher storage
injections. This is offset in part by the cumulative effect of a
change in depreciable life from 20 to 25 years in accordance with
FERC guidelines which was recorded in the third quarter of 2002.
- EIF commenced operations July 1, 2003 and the earnings from
this investment more than offset the 2002 third quarter earnings
from the Saskatchewan System and Alliance Pipeline (Canada),
which are now included in EIF. However, the interest in Alliance
Pipeline (Canada) was only 21.4% in 2002 and had increased to 50%
prior to the disposition to EIF.
--------------------------------------------------------------------Energy Transportation South-------------------------------------------------------------------- Three months Nine months ended ended(millions of Canadian dollars) September 30, September 30,-------------------------------------------------------------------- 2003 2002 2003 2002 --------------------------------------Enbridge Energy Partners 6.0 4.5 19.7 13.3Feeder Pipelines and Other 1.1 2.7 2.9 7.1Enbridge Midcoast Energy - 8.9 - 11.2Enbridge Energy Partners dilution gain - - 9.2 6.1 -------------------------------------- 7.1 16.1 31.8 37.7Writedown of Enbridge Midcoast Energy assets - (76.3) - (76.3) -------------------------------------- 7.1 (60.2) 31.8 (38.6) -------------------------------------- --------------------------------------
- Higher earnings from EEP are due to the acquisition of the
Enbridge Midcoast Energy assets in October 2002.
- Feeder Pipelines and Other reflect lower earnings from Frontier
as a result of lower tolls and volumes as well as higher costs on
the Toledo System.
- In each year, EEP issued additional common units. Enbridge did
not participate in these offerings, resulting in dilution gains.
--------------------------------------------------------------------Gas Distribution and Services -------------------------------------------------------------------- Three months Nine months ended ended(millions of Canadian dollars) September 30, September 30,-------------------------------------------------------------------- 2003 2002 2003 2002 -------------------------------- Enbridge Gas Distribution 2.8 (2.0) 171.5 108.8Noverco 0.6 1.3 22.6 24.6CustomerWorks/ECS 4.5 2.5 13.3 8.0Enbridge Gas New Brunswick 1.3 0.4 3.4 2.4Aux Sable (1.6) (0.9) (8.2) (3.4)Other Gas Distribution Operations 0.3 1.0 7.6 6.8Gas Services (0.6) (4.4) (1.2) (9.8)Other (1.0) 0.2 0.2 (0.1) -------------------------------- 6.3 (1.9) 209.2 137.3 -------------------------------- --------------------------------
- Higher earnings in 2003 are attributable to the colder than
normal weather experienced in the Enbridge Gas Distribution
franchise area, amounting to $44.2 million. During the
comparative nine months of 2002, weather was warmer than normal,
resulting in a $29.4 million reduction in earnings. In 2003,
degree days, which are used as a measure of coldness, were 19.3%
greater than 2002 and 13.8% greater than the forecast based on
normal weather.
Three months Nine months(millions of Canadian dollars ended endedexcept number of degree days) September 30, September 30,------------------------------------------------------------------- 2003 2002 2003 2002 ------------------------------------ Actual degree days 801 851 4,007 3,358Forecast degree days based on normal weather 714 699 3,521 3,631Earnings increase/(decrease) due to weather 2.5 10.0 44.2 (29.4)
- The positive effect of weather in the current year is offset in
part by a $7.1 million regulatory disallowance related to
long-term transportation contracts recognized in the first
quarter of 2003. The improved earnings in the third quarter of
2003 include the positive effect of the 2003 rate settlement and
a decrease in operating and maintenance expenses. Operating and
maintenance expenses were higher in the first and second quarters
as a result of colder than normal weather and the timing of
expenditures.
- The main component of CustomerWorks/ECS earnings in 2003 is the
contribution from CustomerWorks. The primary operations of
Enbridge Commercial Services (ECS) were rebundled in Enbridge Gas
Distribution at the end of 2002. In 2002, earnings from
CustomerWorks were affected by activity levels, including
customer service calls, which were lower due to warmer weather.
In 2003, earnings are based on a fixed fee assuming normal
activity and reflect growth in the CustomerWorks customer base.
- The loss from Aux Sable reflects the combined effect of higher
natural gas prices and lower ethane prices, most significantly
during the second quarter. The results from Aux Sable in 2003
also reflect the increase in ownership interest from 21.4% to
42.7% offset by lower depreciation as the acquisition of the
additional interest was at a discount to the book value.
- The loss of $1.2 million for Gas Services in 2003 is an
improvement of $8.6 million from the same period last year. The
improvement is due primarily to the commencement of fee-based gas
service management contracts with certain U.S.-based companies in
late 2002 and increased demand for natural gas and associated
transmission service, reducing merchant capacity losses on
Alliance and Vector.
--------------------------------------------------------------------International -------------------------------------------------------------------- Three months Nine months ended ended(millions of Canadian dollars) September 30, September 30,-------------------------------------------------------------------- 2003 2002 2003 2002 -------------------------------- OCENSA/CITCol 8.1 9.8 24.0 28.1CLH 11.4 7.6 32.5 23.9Jose Terminal and Other (1.6) (1.0) (4.4) (1.6) -------------------------------- 17.9 16.4 52.1 50.4 -------------------------------- --------------------------------
- Earnings from OCENSA/CITCol decreased due to lower incentive
earnings from CITCol, consistent with prior quarters.
- Operating results from CLH reflect increased volumes and the
impact of the stronger Euro, partially offset by a reduction in
marine fleet revenues due to the scheduled retirement of certain
ships.
- As a result of a breach of the Jose Terminal operating
agreement by PDVSA, the Venezuelan state oil company, the SWEC
Partnership has filed a notice of contract termination and has
filed for international arbitration, as provided for in the
operating agreement. The Company ceased recognition of earnings
commencing February 1, 2003. Other is primarily administration
and business development costs and the results of the Technology
business.
Corporate
Corporate costs total $48.6 million for the nine months ended
September 30, 2003 compared to $31.8 million for the same period
in 2002. The 2002 results included a $17.8 million after-tax gain
on the sale of marketable securities. For the three months ended
September 30, 2003, corporate costs are $19.0 million compared to
$19.9 million for the same period in 2002.
Enbridge will hold a conference call at 2:15 p.m. Mountain time
(4:15 p.m. Eastern time) today to discuss the third quarter
results. The call can be accessed at 1-800-375-9259 and will be
broadcast live on the Internet at www.enbridge.com/investor. A
replay will be available shortly thereafter at 1-800-408-3053
using the access code 1488876#.
The interim financial statements and MD&A are available on
Enbridge's website.
Enbridge Inc. is a leader in energy transportation and
distribution in North America and internationally. As a
transporter of energy, Enbridge operates, in Canada and the U.S.,
the world's longest crude oil and liquids pipeline system. The
Company also has international operations and a growing
involvement in the natural gas transmission and midstream
businesses. As a distributor of energy, Enbridge owns and
operates Canada's largest natural gas distribution company, which
provides distribution services in the provinces of Ontario and
Quebec and in New York State; and is developing a gas
distribution system for the Province of New Brunswick. The
Company employs approximately 4,000 people, primarily in Canada,
the U.S. and South America. Enbridge common shares trade on the
Toronto Stock Exchange in Canada and on the New York Stock
Exchange in the U.S. under the symbol ENB. Information about
Enbridge is available on the Company's website at
When used in this news release, the words "anticipate", "expect",
"project", "believe", "estimate", "forecast" and similar
expressions are intended to identify forward-looking statements,
which include statements relating to pending and proposed
projects. Such statements are subject to risks, uncertainties and
assumptions pertaining to operating performance, regulatory
parameters, weather and economic conditions and, in the case of
pending and proposed projects, risks relating to design and
construction, regulatory processes, obtaining financing and
performance of other parties, including partners, contractors and
suppliers.
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