Enbridge Inc. (NYSE:ENB) is heading for the hills – Fort Hills that is. The company has made a deal to develop the pipeline system for the Fort Hills oil sands project.
This is worth an additional C$3.60 per Enbridge share, according to Desjardins Securities analyst Daniel Shteyn, who hiked his price target to C$44.50 from C$41.00 as a result. He expects the stock will be above C$50 in several years as its many pipeline expansion projects come closer to being completed.
This proposed pipeline system will cost an estimated C$2-billion and will initially be able to move 250,000 barrels of diluted bituman daily from Fort McMurray, Alberta, to the proposed upgrader site in Sturgeon County. Service is planned for mid-2011.
Fort Hills Energy, L.P. is 60%-owned by Petro-Canada (NYSE:PTR), while both Teck Cominco Ltd. (TCK) and UTS Energy Corp. have 20% stakes.
And while the The Fort Hills oil sands project remains subject to final regulatory approvals, Mr. Zive thinks the chances of it being cancelled are “highly unlikely” despite “increasingly marginal project economics for Petro-Canada and Teck Cominco, given excess cash flow and a lack of reinvestment opportunities.”
ENB 1-yr chart: