Enbridge posts higher profit, defers C$5 billion in spending

Fri Feb 19, 2016 11:53am EST
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By Nia Williams

CALGARY, Alberta (Reuters) - Enbridge Inc (ENB.TO: Quote), Canada's largest pipeline company, reported a higher-than-expected quarterly profit on Friday and said it will defer C$5 billion ($3.62 billion) in spending from this year and next until 2018 due to project delays.

Shares of Enbridge, whose customers have been hard hit by the collapse of crude oil prices, fell 1.1 percent to C$42.92 on the Toronto Stock Exchange as concerns about its funding plan and growth strategy surfaced and the recent oil market rally lost steam.

"Overall, we view the quarter as neutral for the stock weighing off the good results and reiteration of 2016 guidance against what we see as continued market concerns about execution of the funding plan along with the deferral of growth," RBC Capital Markets analyst Robert Kwan said in a note.

Calgary-based Enbridge's U.S. arm, Enbridge Energy Partners LP (EEP.N: Quote), said on Tuesday the Sandpiper and Line 3 replacement pipeline projects were delayed to 2019 from 2017 to allow for completion of environmental reviews and permitting in Minnesota.

The Sandpiper project is intended to supply crude oil from North Dakota to refineries located in the U.S. Midwest and eastern Canada. The Line 3 Replacement project begins in Alberta and ends in Wisconsin.

Enbridge has a C$26 billion commercially secured capital program through 2019, of which about C$8 billion has already been funded and brought into service through the end of 2015.

Chief Executive Al Monaco said the company's priority would be funding its secured capital program, but added that it would continue to look for organic growth and strategic asset deals.

"Given a higher cost of capital today that we are seeing, we will be lowering the microscope even further to make sure that we are deploying the most optimal projects," Monaco said.   Continued...

The Enbridge Tower is pictured on Jasper Avenue in Edmonton in this August 4, 2012 file photo.  REUTERS/Dan Riedlhuber/Files