CALGARY, ALBERTA--July 30, 2003 - Enbridge Inc. today announced
earnings applicable to common shareholders of $549.2 million for
the six months ended June 30, 2003, or $3.33 per share, compared
with $546.4 million, or $3.45 per share, for the same period in
2002.
Earnings for the three months ended June 30, 2003, are $445.4
million, or $2.70 per share, compared with $433.3 million, or
$2.74 per share, for the same period in 2002.
The 2003 results include a $169.1 million gain on the sale 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. Excluding these gains, 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 and higher earnings from additional
interests in the Alliance Pipeline.
Enbridge President & Chief Executive Officer Patrick D. Daniel
said, "Our results are again strong with our six-month earnings
about 5% ahead of last year when significant non-recurring
factors are taken into consideration. Together with our quality
asset base and strong balance sheet, Enbridge is well positioned
relative to our industry peers. We plan to continue to translate
this strength into low-risk success."
Mr. Daniel added, "More significantly, from an operating
perspective, the final phase of the Terrace expansion program,
Phase III, was placed into service on April 1, 2003. The 140,000
barrels per day of additional throughput capacity from Phase III,
along with the recently announced Spearhead Pipeline, and other
initiatives, provide producers in Western Canada, especially
those in the Alberta oil sands, with increased access to United
States markets and the opportunity for higher netbacks. These
initiatives provide producers with necessary capacity and
delivery points in key strategic markets."
On July 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 September
1, 2003, to shareholders of record on August 15, 2003.
Consolidated Earnings------------------------------------------------------------------- Three months Six months(millions of ended endedCanadian dollars) June 30, June 30,------------------------------------------------------------------- 2003 2002 2003 2002 ---------------------------------Energy Transportation North 251.1 59.7 317.0 121.2Energy Transportation South 15.6 7.4 24.7 21.6Gas Distribution and Services 174.8 126.7 202.9 139.2International 18.6 17.5 34.2 34.0Corporate (14.7) (12.2) (29.6) (11.9) --------------------------------- 445.4 199.1 549.2 304.1Discontinued Operations - 234.2 - 242.3 --------------------------------- 445.4 433.3 549.2 546.4 --------------------------------- ---------------------------------
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 EIF recorded in the second quarter
of 2003.
- 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 $41.7 million in 2003, including
$27.4 million in the second quarter. The positive weather 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. In 2002, warm weather negatively affected earnings by $39.4
million, including $24.0 million in the second quarter.
- Corporate included a $17.8 million after-tax gain on 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 reduction. 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 in comparison to a net
recovery of $1.4 million in 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, the placing into
service of Terrace Phase III, improved results from gas service
activities and higher earnings from EEP. These positive factors
are partially offset by higher operating expenses in the gas
distribution utility, primarily in the first quarter.
Energy Transportation North------------------------------------------------------------------- Three months Six months(millions of ended endedCanadian dollars) June 30, June 30,------------------------------------------------------------------- 2003 2002 2003 2002 ---------------------------------Enbridge System 40.7 33.2 70.3 68.3Athabasca System 11.4 9.4 23.1 19.5NW System 2.0 2.0 4.1 4.4Saskatchewan System 1.4 1.7 3.1 3.3Alliance Pipeline 22.2 10.5 37.3 19.8Vector Pipeline 2.3 1.2 4.3 2.4Other 2.0 1.7 5.7 3.5 --------------------------------- 82.0 59.7 147.9 121.2Gain on sale of assets to Enbridge Income Fund 169.1 - 169.1 - --------------------------------- 251.1 59.7 317.0 121.2 --------------------------------- ---------------------------------
- Enbridge System earnings for the second quarter of 2003 include
incremental earnings from Terrace as Phase III was placed in
service on April 1, 2003. However, the results are negatively
affected by a higher power allowance credit due to shippers.
- Higher earnings from the Athabasca System are primarily the
result of the completion of additional facilities and tankage.
- Alliance 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.
- Vector earnings reflect increased volumes due to both colder
than normal weather in Eastern Canada during the first quarter of
2003 and higher storage injections during the second quarter.
- On June 30, 2003, Enbridge sold the Saskatchewan System and the
50% interest in Alliance Canada to EIF for an after-tax gain of
$169.1 million.
Energy Transportation South------------------------------------------------------------------- Three months Six months(millions of ended endedCanadian dollars) June 30, June 30,------------------------------------------------------------------- 2003 2002 2003 2002 --------------------------------Enbridge Energy Partners 5.9 4.4 13.7 8.8Feeder Pipelines and Other 0.5 2.0 1.8 4.4Enbridge Midcoast Energy - 0.8 - 2.3Enbridge Energy Partners dilution gain 9.2 0.2 9.2 6.1 -------------------------------- 15.6 7.4 24.7 21.6 -------------------------------- --------------------------------
- EEP earnings are higher due to the acquisition of the Enbridge
Midcoast Energy assets in October 2002. Enbridge's effective
weighted average ownership interest in EEP also increased
slightly from the prior year to approximately 13.8%.
- Feeder Pipelines and Other reflect lower earnings from Frontier
as a result of lower tolls and volumes.
- 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 Six months(millions of ended endedCanadian dollars) June 30, June 30,------------------------------------------------------------------- 2003 2002 2003 2002 ---------------------------------Enbridge Gas Distribution 158.0 107.3 168.7 110.8Noverco 11.8 14.6 22.0 23.3CustomerWorks/ECS 3.7 3.7 8.8 5.5Enbridge Gas New Brunswick 0.9 1.0 2.1 2.0Aux Sable (4.8) (1.6) (6.6) (2.5)Other Gas Distribution Operations 5.1 4.3 7.3 5.8Gas Services (0.3) (2.4) (0.6) (5.4)Other 0.4 (0.2) 1.2 (0.3) --------------------------------- 174.8 126.7 202.9 139.2 --------------------------------- ---------------------------------
- Higher earnings in 2003 are attributable to the colder than
normal weather experienced in the Enbridge Gas Distribution
franchise area, amounting to $41.7 million. During 2002, weather
was warmer than normal, resulting in a $39.4 million reduction in
earnings. In 2003, degree days, which are used as a measure of
coldness, were 27.9% greater than 2002 and 14.2% greater than the
forecast based on normal weather.
(millions of Canadian Three months Six monthsdollars except number ended endedof degree days) June 30, June 30,------------------------------------------------------------------- 2003 2002 2003 2002 ---------------------------------Actual degree days 2,130 1,690 3,206 2,507Forecast degree days based on normal weather 1,887 1,912 2,807 2,932Earnings increase/(decrease) due to weather 27.4 (24.0) 41.7 (39.4)
- The positive effect of weather is offset in part by the $7.1
million regulatory disallowance related to long-term
transportation contracts recognized in the first quarter of 2003,
higher operating and maintenance expenses as a result of colder
than normal weather and the timing of expenditures.
- The Noverco contribution reflects improved operating results
from Gaz Metropolitain, combined with earlier recognition of
revenues as a result of the unbundling of rates. The positive
operating results are more than offset by changes in tax rates
recorded in the respective second quarters which decrease
earnings in 2003 and increased earnings in 2002.
- 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. Earnings from CustomerWorks/ECS
are affected by service levels in 2003 compared with 2002.
- The loss from Aux Sable reflects Enbridge's increased ownership
interest as well as the combined effect of higher natural gas
prices and lower ethane prices during the first half of 2003 and
more significantly during the second quarter.
- The Gas Services results improved due primarily to the
commencement of 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 Six months(millions of ended endedCanadian dollars) June 30, June 30,------------------------------------------------------------------ 2003 2002 2003 2002 -------------------------------OCENSA/CITCol 7.5 7.8 15.9 18.3CLH 12.7 9.9 21.1 16.3Jose Terminal and Other (1.6) (0.2) (2.8) (0.6) ------------------------------- 18.6 17.5 34.2 34.0 ------------------------------- -------------------------------
- Earnings from OCENSA/CITCol decreased due to lower incentive
earnings from CITCol.
- 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 $29.6 million for the six months ended June
30, 2003 compared to $11.9 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 June
30, 2003, corporate costs are $14.7 million compared with $12.2
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 second quarter
results. The call will be broadcast live on the Internet at
www.enbridge.com/investor. A replay will be available shortly
thereafter at 1-800-408-3053.
The interim financial statements and MD&A are available on
Enbridge's web site at www.enbridge.com.
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 web site 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 certain 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.
-30-