Dislocation = Opportunity In Enbridge Preferred Shares
Keubiko • 31 Comments
Keubiko • 31 Comments
Jun. 19, 2015, 6:51 PM
- Enbridge's (NYSE:ENB) long awaited dropdown of its Canadian liquids pipeline and renewable energy assets valued at $30.4B to its Enbridge Income Fund (OTC:EBGUF) subsidiary gives ENB the leverage to deploy capital on acquisitions or growth opportunities such as in the gas and power generation sector, or even “ramping up the dividend,” CEO Al Monaco says.
- ENB, which already had announced plans to increase its dividend by 33% this year, says it now expects average per-share dividend growth of 14%-16% during 2016-18.
- Analysts believe the jury is still out; “It remains to be seen how much value this creates,” says AltaCorp Capital's Dirk Lever. “You’re in a point in time in the marketplace where it’s pretty tough for anything to do with energy.”
- Standard & Poor’s downgraded the credit rating of ENB and its subsidiaries to BBB+ from A- after the deal, believing the company’s financial risk profile is “aggressive."
- Related ticker: EEP
Jun. 19, 2015, 8:09 AM
- Enbridge (NYSE:ENB) says it will transfer its Canadian liquids pipelines business and certain Canadian renewable energy assets to Enbridge Income Fund (OTC:EBGUF) in a deal valued at C$30.4B ($24.8B).
- ENB says the deal will provide an alternative source of funding for its growth opportunities and asset acquisitions.
- Enbridge Income Fund, which is operated by ENB, maintains a diversified portfolio of energy transportation and power generation businesses.
- Related ticker: EEP
Jun. 18, 2015, 10:53 AM
- Canada's National Energy Board imposes new conditions on Enbridge's (ENB +0.1%) 300K bbl/day Line 9, including additional testing, before it will allow the oil pipeline to enter service.
- ENB must carry out hydrostatic tests at three locations on the Sarnia, Ontario, to Montreal pipeline, and must carry out bi-weekly ground patrols and quarterly integrity tests for the first two years of operation for the line, the regulator says.
- The NEB says the public controversy over the reversal of the line so it can carry crude from Alberta's tar sands means the project requires extra scrutiny.
Jun. 15, 2015, 5:41 PM
- The two biggest customers on Enbridge's (NYSE:ENB) newly reversed pipeline to carry Western Canadian oil from Sarnia, Ontario, to Montreal say they want to meet Canada's National Energy Board to find out why the pipeline's opening has been delayed by months.
- Valero Energy (NYSE:VLO) and Suncor Energy (NYSE:SU), whose respective 265K bbl/day Jean Gaulin refinery and 130K bbl/day Montreal refinery will benefit from the reversal to pump oil eastward to Quebec, say the delay in approving the start-up of the 300K bbl/day Line 9 pipeline is pushing up their costs and harming their operations.
- The controversial project will carry western Canadian crude to Quebec, replacing supplies currently shipped by rail or imported from abroad; the board approved the project in February but refused to let ENB open the 400-mile line until it met 30 conditions related to emergency response and pipeline integrity.
Jun. 8, 2015, 2:57 PM
- The U.S. government proposes a settlement requiring Enbridge (ENB -3.5%) to complete natural resource restoration projects and pay ~$4M following its 2010 oil pipeline spill in Michigan, the Justice Department says.
- The July 2010 spill dumped 800K gallons of oil and affected 38 miles of Michigan’s Kalamazoo River.
- ENB last month reached a settlement with state officials to pay US$75M over the incident.
Jun. 5, 2015, 6:36 PM
- Enbridge (ENB, EEP) is granted a certificate of need for its proposed Sandpiper pipeline by the Minnesota Public Utilities Commission, which agreed that the $2.6B, 610-mile pipeline is necessary and in the public interest.
- The pipeline will ship crude oil from the Bakken oil fields to ENB’s existing terminal in Superior, Wis., but the PUC will hold separate proceedings on exactly which path it should take across northern Minnesota.
- The PUC added requirements for the environmental review of the pipeline's route, including a study of the cumulative impacts of both the Sandpiper and ENB's proposal to replace its aging Line 3, which carries oil from Alberta to Superior.
May 18, 2015, 7:45 PM
- Goldman Sachs had a lot to say about all corners of the energy sector today in addition to the cut in its long-term oil price forecast, its Sell recommendations for oil majors BP, Statoil (NYSE:STO) and Chevron (NYSE:CVX), and its gloomy outlook for offshore drillers Transocean (NYSE:RIG), Diamond Offshore (NYSE:DO) and Atwood Oceanics (NYSE:ATW).
- Goldman awards a Buy rating for Exxon Mobil (NYSE:XOM), "the only U.S. or European major that can generate sufficient free cash flow to cover its dividend near $60/bbl in 2016-17"; while the firm says other oil majors will be struggling to keep the dividend flat, XOM will be in a position to increase the dividend for the next several years.
- With its expectation for long-term weakness in oil and gas prices, Goldman sees risk exposure in many names that are reliant on commodity prices, suggesting selling LINE, DPM, NGLS, while predicting PAGP and NS would benefit from a removal of the U.S. crude oil export ban.
- The firm thinks many midstream MLP names now offer attractive valuations, recommending ENB, EPD, ETE, PAA, SXL, WNRL.
- Goldman sees an upturn for frac sand provider Emerge Energy (NYSE:EMES), upgrading shares to Buy from Neutral.
- Other Buys: CLR, NFX, CQP, HEP.
- Other Sells: TRP, TCP, GPOR, MUR, GTE
May 15, 2015, 2:45 PM
- Canada says it is committing to cut greenhouse gas emissions by 30% below 2005 levels by 2030, partly by introducing new regulations on its oil and gas sector.
- Environment Minister Aglukkaq says Canada will cut its emissions to 515 metric megatons by 2030 from 726 metric megatons in 2013; earlier this week, Ontario - Canada’s most populous province - set its own 2030 target of 112 megatons, which would represent a 46% cut from 2005 levels.
- To meet the new target, Canada will develop regulations to cut methane emissions from the oil and gas sector, such as industrial leaks and gas flares, as well as new rules to control emissions from the electricity and chemical sectors, including from nitrogen fertilizers.
- Relevant tickers: SU, ENB, TRP, IMO, CNQ, CVE, TCK, TAC, OTCQB:HUSKF, OTCQX:COSWF
May 13, 2015, 9:16 AM
- Enbridge (ENB, EEP) reaches a settlement with the state of Michigan nearly five years after a broken pipeline released more than 800K gallons of oil that spoiled 40 miles of the Kalamazoo River and Talmadge Creek.
- ENB agrees to spend $75M, much of it on various projects, including a dam removal and improved access to boating and fishing on the river, and will continue to monitor the impacts of the spill on the surrounding environment.
- The improvements are on top of ENB’s costs directly related to the 2010 spill, which have been pegged at more than $1B.
May 7, 2015, 6:25 PM
- Canadian oil producers plunged for a second straight day as "all bets are off" after election results in Alberta raised concerns over the possibility of higher taxes for the companies.
- Among today's losers: SU -2.6%, OTCQB:HUSKF -5.2%, GTE -5.8%, PWE -5.7%, IMO -1%, CVE -1%, OTCQX:COSWF -3.4%, OTCPK:MEGEF -5%.
- COSWF is among the most exposed to a potential hike in royalties and stricter environmental policies, while electricity supplier TransAlta (NYSE:TAC) would suffer from the new government’s vow to shut coal plants sooner than planned, according to analysts at BMO Nesbitt Burns and RBC Dominion.
- Advice is split on owning stocks of companies that transport and process fuels in Alberta; Raymond James says stocks such as TransCanada (NYSE:TRP) and Enbridge (NYSE:ENB) are less directly exposed to reduced investment in the sector, but RBC advises to sell pipeline and midstream companies with operations in Alberta.
- Analysts also are divided about how much producers with oil refineries, such as SU and IMO, could offset losses from potentially higher royalties by boosting processing of crude in Alberta, a move pro-labor NDP has pledged to support.
May 6, 2015, 2:36 PM
- Canadian energy stocks are broadly lower after the shocking election result in Alberta raised questions about the future of the country's oil industry: SU -3.3%, ENB -2.8%, TRP -2.6%, IMO -2.3%, CNQ -2.3%, CVE -5.8%, OTCQB:HUSKF -1%, TCK -1.6%, TAC -4.1%, OTCQX:COSWF -6%.
- "Energy is such a critical issue to Alberta, I’m really not that concerned," ENB CEO Al Monaco says, but investors and analysts disagree.
- "It’s completely devastating" for energy companies and investors, saysCanoe Financial's Rafi Tahmazian of stated plans by the newly elected government to raise corporate taxes, review the government’s take of energy revenue, scale back advocacy for pipelines and phase out coal power more quickly.
- “If you are invested in energy stocks, you should be concerned,” says AltaCorp’s Jeremy McCrea, noting that drillers already face higher costs to extract oil and gas in Alberta than in many jurisdictions, so an increase in royalties would make the province even less competitive.
May 6, 2015, 7:38 AM
- In a stunning election result, voters in Canada's energy-rich Alberta province swept aside the four-decade hold on power by the ruling Progressive Conservative Party and elected an New Democratic Party majority government that wants to raise corporate taxes and increase oil and gas royalties.
- NDP leader Rachel Notley - who has vowed to raise the corporate tax rate to 12% at a time energy companies are reeling from layoffs and project cancellations amid weaker oil prices - is expected to succeed Jim Prentice as Alberta’s premier.
- Notley has said she would not lobby for the proposed Keystone XL pipeline to link Alberta’s oil deposits to refineries in Texas, and that she is against the Northern Gateway pipeline from Alberta to the British Columbia coast.
- She also has promised another review of oil royalties at a time other oil producing areas around the world that are also struggling with low oil prices are expected to make their terms more appealing.
- Relevant tickers: ENB, SU, TRP, IMO, CNQ, CVE, OTCQB:HUSKF, OTCQX:COSWF, XOM, BP, RDS.A, RDS.B
May 6, 2015, 7:08 AM
- Enbridge (NYSE:ENB): Q1 EPS of $0.56 misses by $0.04.
May 5, 2015, 5:30 PM
- ANSS, ARQL, ATHM, AVA, AYR, BAM, BUD, CEQP, CHH, CHK, CKSW, CLH, CMLP, CRNT, CRZO, CSTE, DAVE, DDD, DNR, EE, EGAN, ENB, EXK, GDP, GLOG, HAIN, HCLP, HFC, HSC, HSNI, HTA, IMN, INFI, KELYA, LAMR, LG, LINC, MEMP, MPO, MSI, MWE, NOR, NXTM, OXY, PERI, PGNX, POWR, RDC, RHP, SBGI, SCMP, SE, SNH, SODA, STRA, SUP, SWC, TMHC, TRXC, VG, VOYA, VSI, WCG, WD, WEN, WIX, WMC, WPX, XLS, XRAY
May 5, 2015, 8:25 AM
- The discount for heavy Western Canadian Select crude vs. West Texas Intermediate shrank to the lowest since 2012, as a new pipeline started and production sites were shut for maintenance.
- WCS strengthened as Enbridge (NYSE:ENB) said it filled a new 570K bbl/day pipeline last month and MEG Energy (OTCPK:MEGEF) was said to plan maintenance at its 210K bbl/day Christina Lake oil sands site.
- The ENB line will raise the amount of crude that can be shipped from Edmonton, in northern Alberta, to the storage terminals in Hardisty, in southern Alberta, where on the supply side, MEG’s work at Christina Lake is said to be scheduled for this quarter.
May 1, 2015, 7:20 PM
- Despite Pres. Obama's refusal to grant a permit for the northern cross-border leg of the Keystone XL pipeline (NYSE:TRP), "just as water will find its way through any crack in a foundation," Canada’s oil keeps streaming its way to Texas’ Gulf refineries, Financial Post's Claudia Cattaneo writes.
- While Keystone’s approval has sat stalled for six years, other pipelines have been built or expanded to ease bottlenecks: TRP's southern leg of Keystone XL and its Marketlink project from Cushing to Port Arthur, Enbridge (NYSE:ENB) and Enterprise Products' (NYSE:EPD) Seaway pipeline from Cushing to Freeport, and there's heavy oil coming by train and barge - it takes longer, costs more and is less efficient, but it's coming nevertheless.
- Even a prolonged slump in oil prices is not likely to stop Canada’s rush to the Texas coast: Both Imperial Oil (NYSEMKT:IMO) and Suncor (NYSE:SU) said this week their Q1 oil sands production levels are up 11% Y/Y, with IMO soon doubling production at the Kearl oil sands mine and new production beginning at its Nabiye operation.
Enbridge, Inc. engages in the provision of gas and oil businesses. It operates through the following segments: Liquid pipelines, gas distribution, gas pipelines processing and energy services, sponsored investments, and corporate. The Liquids Pipelines segment consists of common carrier and... More
Sector: Basic Materials
Industry: Oil & Gas Pipelines
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