February 3, 2010 / 12:24 PM / 8 years ago

UPDATE 3-Enbridge eyes oil sands gains as profit rises

* Planning to benefit from oil sands recovery

* Q4 EPS C$0.80, vs C$0.71 a yr ago

* Adjusted EPS C$0.64, vs estimate of C$0.65

* Shares up C$0.82 at C$47.71 on TSX (Updated throughout with comments on oil sands)

By Jeffrey Jones

CALGARY, Alberta, Feb 3 (Reuters) - Enbridge Inc (ENB.TO) is poised to take advantage of the quickening recovery in Canada’s oil sands sector as more developers sign deals to move the tar-like crude on its oil pipeline network, the company’s chief executive said on Wednesday.

After reporting a 14 percent jump in fourth-quarter earnings, Enbridge CEO Pat Daniel said he is not surprised by the pickup in oil sands activity, which has accelerated in recent weeks as several companies have moved projects forward.

“With each and every one of the announcements that have come along, we have been working with the parties well in advance of their announcements to try to ensure that we’re able to secure their business and bring them into our infrastructure,” Daniel told analysts and reporters.

“None of them have caught us by surprise by any means, and we think we’ve got a very good chance because of the competitive positioning that we’ve got to bring a lot of this volume on.”

The company, best known as operator of the main artery for Canadian oil exports to the United States, said on Wednesday it signed up Norway’s Statoil STL.OL as the sixth shipper on its Regional Oil Sands System in northern Alberta.

Statoil has agreed to ship 30,000 barrels a day initially from its Leismer project on Enbridge’s Waupisoo Pipeline starting in 2011. Executives said the line could support that volume, but future production phases will require expansion.

That would cost C$170 million ($160 million), but Daniel said he believes more shippers in the region will need space so an expansion project will likely be bigger.

Other oil sands ventures that have moved forward in recent weeks include the Surmont expansion, run by ConocoPhillips (COP.N) and Total SA (TOTF.PA), and the Sunrise development, planned by Husky Energy Inc (HSE.TO) and BP Plc (BP.L).

Enbridge can dominate that part of the oil sands business because of the location of pipelines it has built up over several years, Edward Jones analyst Lanny Pendill said.

“They are going to be the logical choice because they are already there, so they’re going to be the lowest cost source of connecting these new projects to the existing infrastructure,” Pendill said.

But it has also attracted shippers by consulting with producers in advance of expansions and finding ways to get crude to markets offering high returns, he said.

Enbridge is in the middle of a C$12 billion expansion to boost its capacity to the United States and elsewhere.

One of those new projects, a 450,000 barrel per day expansion of its main line to the United States, dubbed Alberta Clipper, will open on April 1, three months ahead of schedule. The other, the 180,000 bpd Southern Lights project, is due to start up in the second half.


In the fourth quarter, Enbridge, also known for its North American gas pipelines and distribution businesses, earned C$300 million, or 80 Canadian cents a share, up from a year-earlier C$264 million, or 71 Canadian cents a share.

Adjusted profit, which excludes most one-time time items, rose 18 percent to C$239 million, or 64 Canadian cents a share, from C$202 million, or 55 Canadian cents a share.

On that basis, analysts had forecast earnings of 65 Canadian cents a share, according to Thomson Reuters I/B/E/S.

The company said strength in the oil pipeline business was the biggest factor in the profit gain.

Enbridge shares, which have risen about 16 percent over the past 12 months, were up 82 Canadian cents at C$47.71 on the Toronto Stock Exchange.

$1=$1.06 Canadian Additional reporting by Euan Rocha in Toronto; editing by Rob Wilson

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