January 25, 1999
HIGHLIGHTS:
- 1998 earnings up 11 percent to $240.9 million
- Quarterly dividends increased 6 percent to $0.575 per common
share
- Share price increased 8 percent to $70.50 as of year end 1998
- Deliveries on liquids pipelines systems averaged a record
2,136,000 barrels per day
- $1.6 billion invested in the largest capital program in the
Company's history
For Enbridge Inc., 1998 was another successful year highlighted by
higher earnings, an increase in the quarterly dividend, and
superior returns to shareholders.
Earnings grew to $240.9 million, or $3.31 per share, up from
$217.3 million, or $3.15 per share, recorded in 1997. The $23.6
million increase reflects higher earnings from the Energy
Transportation business unit, partially offset by lower Energy
Distribution earnings reflecting the warmest weather on record in
key franchise areas.
"The Company's 1998 financial results show that we continue to
deliver on our commitment to our shareholders," said Brian F.
MacNeill, President and Chief Executive Officer of Enbridge Inc.
"Our vision is to go beyond all others to deliver energy and
related services to North American and International customers.
That drives our key corporate objective, which is to provide
long-term value through shareholder returns that are superior to
those of comparable companies. We delivered on that again in
1998, and plan to continue doing so in the future."
Annual dividends rose to $2.24 per common share, an increase of 6
percent over 1997, as quarterly dividends were increased beginning
in the third quarter of 1998 to $0.575 per common share. The
combination of dividend growth and the Company's share price
appreciation meant that for the year ended December 31, 1998, the
total return to an Enbridge shareholder from an investment made at
the beginning of 1998 was 11.7 percent. That compares with a loss
of 5 percent from a composite investment in the Canadian companies
whose business activities and risk levels are most comparable to
Enbridge, and with a loss of 1.6 percent by the Toronto Stock
Exchange 300 Composite Index.
The Enbridge Board of Directors today declared quarterly dividends
of $0.575 per Common Share and $0.34375 per Series A Preference
Share. Both dividends are payable on March 1, 1999, to
shareholders of record on February 12, 1999.
In 1998, earnings from the Energy Transportation business unit
were $176.7 million, an increase of $54.2 million, or 44 percent,
from 1997. The increase reflects higher returns generated from
system expansion, and the settlement of an insurance claim
outstanding since 1991. Results also reflect improved
contributions from the Colombia pipeline project, which was
completed early in 1998, and allowances for equity funds used
during construction of system expansions, the Athabasca crude oil
pipeline, and the Alliance natural gas pipeline project.
Earnings from the Energy Distribution business unit were down 27
percent to $91.1 million, as earnings from Enbridge Consumers Gas
declined by 34 percent to $82.5 million due to the much warmer
than normal weather and a reduction in the allowed rate of return
on equity. Enbridge estimates that the warmer weather resulted
in a reduction in earnings of approximately $40 million when
compared with earnings expected under normal weather patterns.
However, the Company continued to implement a variety of cost
reduction initiatives, operational efficiencies and other
corporate actions across the Enbridge Group of Companies, which
substantially mitigated the adverse effect of the warmer weather
on consolidated 1998 earnings. Energy Distribution earnings also
include higher earnings attributable to the Company's 32 percent
interest in Noverco Inc., acquired in late 1997.
Net costs of the Corporate segment, which include financing and
other investing activities, were $26.9 million, 9 percent lower
than in 1997. Higher interest costs resulting from increased debt
levels associated with growth initiatives were offset by one time
gains resulting from the sale of non-strategic real estate and the
recovery of previously expensed assets held under a financing
arrangement.
Consistent with prior years, the Company recorded a loss of $7.7
million for the fourth quarter of 1998, compared with a loss of
$5.2 million in the fourth quarter of 1997, reflecting the
seasonality of earnings at Enbridge Consumers Gas.
To position the Company for further growth, in 1998, Enbridge
invested more than $1.6 billion including $1.4 billion for
additions to property, plant and equipment, and approximately $200
million on long-term investments. This level of investment was
made possible by the Company's strong financial position and
continued access to capital markets: since the beginning of 1996,
the Company has raised more than $3.4 billion through equity and
debt offerings, including $1.9 billion in 1998.
In 1998, Enbridge invested in projects to expand its core
pipelines, reflecting its positive outlook for long-term supply
growth in crude oil and natural gas liquids from Western Canada.
The Company also invested in its gas distribution business and new
business opportunities such as retail energy services. Key
accomplishments included:
- Construction of two expansion projects, SEP II and Terrace Phase
I, that will be completed in early 1999 and add approximately
290,000 barrels per day of capacity to the Company's crude oil and
natural gas liquids pipeline systems by year end.
- Construction of the Athabasca Pipeline that will be completed by
the second quarter of 1999 and which will have the capacity to
transport 570,000 barrels per day of heavy oil from the oil sands
near Fort McMurray to the hub at Hardisty, Alberta.
- Participation in two major gas transmission projects that will
move a billion cubic feet per day of natural gas from Western
Canada to markets in Eastern Canada and the U.S. Midwest and
Eastern States by late 2000: the Alliance Pipeline received final
regulatory approvals in 1998 and will start construction in 1999,
while the Vector Pipeline, which will connect with Alliance and
other pipelines at Chicago, Illinois, received initial regulatory
approvals in the U.S.
- Continued expansion of the Enbridge Consumers Gas system, adding
approximately 50,000 new customers in 1998.
Enbridge Inc., formerly known as IPL Energy Inc., is a leader in
energy transportation, distribution and services. 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 is involved in liquids marketing and international
energy projects, and has a growing involvement in natural gas
transmission. As a distributor of energy, Enbridge owns and
operates Canada's largest natural gas distribution company, which
provides gas and retail services in Ontario, Quebec and New York
State; and is involved in the generation and distribution of
electricity. In addition, Enbridge provides retail energy
products and services to a growing number of Canadian and U.S.
markets. The Company employs more than 5,000 people, primarily in
Canada, the U.S. and South America. Enbridge common shares trade
on the Toronto and Montreal stock exchanges in Canada under the
symbol "ENB" and on The NASDAQ National Market in the U.S. under
the symbol "ENBRF". Information about Enbridge is available on
the World Wide Web at http://www.enbridge.com.
When used in this press release, the words "anticipated",
"expected", "projected" 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.
FINANCIAL TABLES TO FOLLOW