CALGARY, ALBERTA--Enbridge today announced that it has reached an
agreement to transfer natural gas gathering, processing and
transportation facilities to Enbridge Energy Partners, L.P. (the
"Partnership") for US$929 million. The transfer includes the
Midcoast, Northeast Texas (formerly Sulphur River) and South Texas
(formerly Transco) systems, which provide natural gas gathering,
processing, transmission and marketing services, primarily in the
U.S. Mid-continent and Gulf Coast regions. The transfer is
subject to financing by the Partnership and other customary
closing conditions.
"The transfer of the Midcoast and related assets is truly a
win-win for Enbridge and the Partnership", said Patrick D. Daniel,
Enbridge President and Chief Executive Officer. "The transfer is
consistent with our strategy to utilize the Partnership as a key
growth vehicle to increase Enbridge's U.S. footprint. It is
immediately accretive to both Enbridge and the Partnership and
will serve to reduce Enbridge's leverage consistent with our
initiative to further strengthen our balance sheet."
Dan C. Tutcher, President of the General Partner, commented on
behalf of the Partnership, "We are very pleased with this
acquisition, which expands and diversifies our asset base and
which is expected to materially increase distributable cash flow.
The acquisition furthers a key strategic objective of the
Partnership to establish a significant foothold in natural gas
infrastructure. This will complement our position as the primary
transporter of crude oil and natural gas liquids from Western
Canada to the mid-west region of the United States. In
particular, the acquisition diversifies our sources of cash flow
by adding a large and stable cash-generating base of intrastate
and regulated interstate transmission assets."
The three systems being transferred together provide an excellent
base in some of the highest gas production areas in the United
States. The Midcoast system consists of 4,100 miles of natural
gas gathering and transmission pipelines with aggregate throughput
capacity of 4.0 billion cubic feet per day, and natural gas
treating and processing assets in the Mid-Continent and Gulf Coast
regions. The Northeast Texas system includes 1,200 miles of
natural gas gathering pipelines with a throughput capacity of 400
million cubic feet per day (MMcf/d), along with five treating
plants and three processing plants. The South Texas system
includes 175 miles of natural gas gathering pipelines with a
throughput capacity of 100 MMcf/d and one treating plant.
Additionally, the South Texas system interconnects with 500 miles
of natural gas transmission pipelines, which the Partnership will
have the right to acquire subject to, among other things, payment
by the Partnership to the original seller of the US$41 million
purchase price and regulatory approvals.
A committee of independent members of the Board of Directors of
the General Partner of the Partnership recommended the approval of
the purchase and the terms of the acquisition on behalf of the
Partnership. The committee retained independent legal and
financial advisors to assist in reviewing the acquisition.
Enbridge expects that the transfer will be accretive to earnings
by approximately $0.05-$0.10 per share annually beginning in 2003.
This improvement is anticipated to arise from higher equity
income from Enbridge's current 12.9% Partnership interest,
incremental incentive earnings, and reduced financing costs.
Assuming the transfer conditions are met, Enbridge expects that
continued debt retirements using the transfer proceeds will reduce
Enbridge's debt leverage to approximately 62%, which is consistent
with its target objective of 60-65% debt leverage by year-end.
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 transportation system.
The Company also is involved in international energy projects and
has 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 Ontario, Quebec and New
York State; and is developing a gas distribution system for the
Province of New Brunswick. Enbridge 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 www.enbridge.com.
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-