Enbridge completes 40 percent of Line 3 work, tops profit estimates

(Reuters) - Enbridge Inc ENB.TOENB.N said on Friday it had completed 40 percent of replacement work on its massive Line 3 pipeline and reported a better-than-expected quarterly profit by reining in costs.

The entrance to Enbridge Inc.'s crude oil storage tank farm in Cushing, Oklahoma, March 24, 2016. REUTERS/Nick Oxford

Canada’s largest pipeline operator won a key approval in June to replace the 1,031-mile (1,660-km) long pipeline, which began service in 1968 and operates at half its capacity.

A replacement would allow the pipeline, which runs from Alberta in western Canada to Wisconsin in the United States, to return to approved capacity of 760,000 barrels per day.

The company also reaffirmed that Line 3 is expected to be in service in the second half of 2019.

Shares of the Calgary-based company were up about 2 percent in New York, while they rose 1 percent in Toronto.

“With that project moving forward, we have higher confidence in the company’s growth outlook for cash flow and dividends,” said Edward Jones analyst Jennifer Rowland.

Western Canadian oil producers have pinned their hopes on the pipeline seen as crucial for ramping up crude supplies.

Like TransCanada Corp TRP.TO, which has been trying to build its Keystone XL oil pipeline project linking Canada's oil sands to U.S. refineries, Enbridge has faced criticism from green groups.

Enbridge said it transported 2.64 million barrels per day (bpd) of crude oil on its Mainline system across Canada and the United States during the quarter, up from 2.45 million bpd in the year-ago quarter.

Net income attributable to common shareholders rose to C$1.07 billion ($822.4 million), or 63 Canadian cents per share, in the second quarter ended June 30, from C$919 million, or 56 Canadian cents per share.

On an adjusted basis, the Calgary, Alberta-based company earned 65 Canadian cents per share. Analysts had expected earnings of 53 Canadian cents per share, according to Thomson Reuters I/B/E/S.

($1 = 1.30 Canadian dollars)

Reporting by Laharee Chatterjee in Bengaluru; Editing by Sriraj Kalluvila