CALGARY, ALBERTA--Enbridge Inc. today announced earnings
applicable to common shareholders of $103.8 million for the three
months ended March 31, 2003, or $0.63 per share, compared with
$113.1 million, or $0.71 per share, for the first quarter of
2002. The $103.8 million in 2003 represents a 19% improvement
over the comparable $87.2 million(1) in 2002. This increase is
driven by colder than normal weather and higher gas volumes on
the gas distribution system. Other 2003 operating results are in
line with 2002 results.
"Results for the first quarter of 2003 met our expectations,"
said Patrick D. Daniel, President & Chief Executive Officer.
"Our increased ownership in Alliance provides an additional
source of predictable and stable earnings and increases strategic
flexibility as Enbridge now shares joint control with the other
partner."
"Phase III of the Terrace Expansion of the Enbridge System was
placed into service on April 1, 2003, and began contributing to
earnings at that time. Phase III is the final phase of the
project and its completion confirms our ability to maintain our
position as the primary transporter of crude oil supply out of
the Western Canadian Sedimentary Basin."
On May 7, 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 June 1, 2003 to
shareholders of record on May 21, 2003.
(1) 2002 earnings of $113.1 million less the gain on marketable
securities of $17.8 million and earnings from discontinued
operations of $8.1 million.
--------------------------------------------------------------------Consolidated Earnings --------------------------------------------------------------------(millions of Canadian dollars) First Quarter-------------------------------------------------------------------- 2003 2002 ----- -----Energy Transportation North 65.9 61.5Energy Transportation South 9.1 14.2Gas Distribution and Services 28.1 12.5International 15.6 16.5Corporate (14.9) 0.3 ----- ----- 103.8 105.0Discontinued Operations - 8.1 ----- ----- 103.8 113.1 ----- ----- ----- -----
The 2003 results for Gas Distribution and Services include the
positive effect of colder than normal weather of $14.3 million,
partially offset by a $7.1 million regulatory disallowance
related to a prior year. In 2002, warm weather negatively
affected earnings by $15.4 million. Also in 2002, a $5.9 million
dilution gain on an Enbridge Energy Partners, L.P. (EEP) unit
issuance, and a $17.8 million gain on a sale of marketable
securities were recorded, and earnings from discontinued
operations were $8.1 million.
Operating factors increasing earnings for the first quarter of
2003 include the additional ownership interest in Alliance,
higher earnings from EEP, and a decrease in net financing costs.
Earnings are negatively impacted by higher operating expenses in
the gas distribution utility and lower earnings from the Enbridge
System.
--------------------------------------------------------------------Energy Transportation North --------------------------------------------------------------------(millions of Canadian dollars) First Quarter-------------------------------------------------------------------- 2003 2002 ----- -----Enbridge System 29.6 35.1Athabasca System 11.7 10.1NW System 2.1 2.4Saskatchewan System 1.7 1.6Alliance Pipeline 15.1 9.3Vector Pipeline 2.0 1.2Other 3.7 1.8 ----- ----- 65.9 61.5 ----- ----- ----- -----
- Enbridge System earnings are lower due to a higher power
allowance credit due to shippers and higher income taxes related
to the Terrace facilities, combined with increased oil
revaluation losses.
- Higher earnings from the Athabasca System are mainly the result
of the completion of the Christina Lake and MacKay River
facilities and additional tankage in 2002.
- Alliance earnings include the additional 15.7% interest
acquired in October 2002.
- Vector earnings include incremental earnings from increased
volumes due to colder than normal weather in eastern Canada and
lower depreciation expense due to the change in depreciable life
of the Vector facilities from 20 to 25 years, starting in the
third quarter of 2002.
--------------------------------------------------------------------Energy Transportation South--------------------------------------------------------------------(millions of Canadian dollars) First Quarter -------------------------------------------------------------------- 2003 2002 ----- -----Enbridge Energy Partners 7.8 4.4Feeder Pipelines and Other 1.3 2.4Enbridge Midcoast Energy - 1.5Enbridge Energy Partners dilution gain - 5.9 ----- ----- 9.1 14.2 ----- ----- ----- -----
- EEP earnings are higher due to the acquisition of the Enbridge
Midcoast Energy assets in October 2002 and Enbridge Inc.'s
increased effective ownership interest in EEP of 1.2%.
- Feeder Pipelines and Other reflect lower earnings from Frontier
as two transportation tariffs were not renewed for 2003.
- In 2002, EEP issued additional common units. Enbridge did not
participate in the offering, resulting in a dilution gain.
--------------------------------------------------------------------Gas Distribution and Services --------------------------------------------------------------------(millions of Canadian dollars) First Quarter-------------------------------------------------------------------- 2003 2002 ----- -----Enbridge Gas Distribution 10.7 3.5Noverco 10.2 8.7Enbridge Commercial Services 5.1 1.8Enbridge Gas New Brunswick 1.2 1.0Aux Sable (1.8) (0.9)Other Gas Distribution Operations 2.2 1.5Gas Services (0.3) (3.0)Other 0.8 (0.1) ----- ----- 28.1 12.5 ----- ----- ----- -----
- Weather is the primary factor affecting gas distribution
earnings and the magnitude of this effect is measured by degree
days. There were 1,076 degree days in the first quarter of 2003
(three months ended December 31, 2002), an increase of 259 degree
days, or 31.7%, from the prior period and 156 degree days colder
than normal. In 2003, colder than normal weather increased
earnings by $14.3 million. In 2002, warmer than normal weather
reduced earnings by $15.4 million.
- The positive effect of weather is offset in part by the $7.1
million regulatory disallowance related to long-term
transportation contracts and 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 MTtropolitain, combined with a change in the timing of
revenue recognition due to the unbundling of rates.
- The main component of Enbridge Commercial Services earnings is
the contribution from CustomerWorks. In 2002, earnings from
CustomerWorks fluctuated with service levels. The 2003 billing
structure is based on a fixed fee for service.
- The loss from Gas Services decreased due to earnings from gas
service management contracts, which commenced in late 2002, and
increased demand for natural gas, which reduced merchant capacity
losses.
--------------------------------------------------------------------International--------------------------------------------------------------------(millions of Canadian dollars) First Quarter-------------------------------------------------------------------- 2003 2002 ----- -----OCENSA/CITCOL 8.4 10.5CLH 8.4 6.4Jose Terminal and Other (1.2) (0.4) ----- ----- 15.6 16.5 ----- ----- ----- -----
- Earnings from OCENSA/CITCOL decrease in the first quarter due
to lower incentive earnings from CITCOL.
- The stronger Euro contributes to higher earnings from CLH in
2003. CLH earnings in the first quarter of 2002 were based on
estimates due to the timing of the acquisition.
- 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. The
Company ceased recognition of earnings commencing February 1,
2003.
Corporate
Corporate costs total $14.9 million for the first quarter of
2003, compared with earnings of $0.3 million for the same period
in 2002.
- The 2003 results reflect lower net financing costs due to
decreased average debt levels and interest income on a loan to
EEP. This loan will be repaid when EEP completes its third-party
financing of the Enbridge Midcoast Energy assets. On May 6, 2003
EEP priced a Class A common unit offering of 3.35 million units
at US$44.79 which is expected to close on May 12, 2003.
- Preferred security distributions are $1.3 million higher in
2003 due to the $200 million, 7.8% preferred securities issued in
February 2002.
- The 2002 results included a $17.8 million after-tax gain on the
sale of marketable securities.
Enbridge will hold a conference call at 3:00 p.m. Mountain time
(5:00 p.m. Eastern time) today to discuss the first 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 (access code 1408567#).
The interim financial statements and MD&A are available on our
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 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-