- Acquiring leading U.S. Gulf Coast light crude export platform,
with VLCC capability
- Advantaged location ensures shortest transit times and lowest
cost exports
- Immediately and strongly accretive investment, with ~90%
contracted cash flows
- Embedded low capital organic expansion opportunities provides
future growth
- Development of on-site solar power results in net-negative
facility emissions
CALGARY, AB, and
INGLESIDE, Texas, Sept. 7, 2021 /PRNewswire/ - Enbridge Inc.
(Enbridge or the Company) (TSX: ENB) (NYSE: ENB) today announced
that it has entered into a definitive purchase agreement with EnCap
Flatrock Midstream to acquire Moda Midstream Operating, LLC (Moda)
for U.S. $3.0 billion in cash,
subject to closing adjustments. The acquisition will significantly
advance the Company's U.S. Gulf Coast export strategy and
connectivity to low-cost and long-lived reserves in the Permian and
Eagle Ford basins. The Company values the transaction at
approximately 8x projected forward EBITDA, and upon closing is
expected to be immediately accretive to Enbridge's financial
outlook.
"We're very excited about acquiring North America's premium, very large crude
carrier (VLCC) capable, crude export terminal," commented
Al Monaco, President and Chief
Executive Officer of Enbridge. "Over the last several years we've
been building a strong position in the U.S. Gulf Coast through both
natural gas and crude infrastructure. Our strategy is driven by the
important role that low cost, sustainable North America energy supply will play in
meeting growing global demand. With close proximity to world-class
Permian reserves, and with cost effective and efficient export
infrastructure, our new Enbridge Ingleside terminal will be
critical to capitalizing on North
America's energy advantage.
"This blue-chip platform aligns very well with our long-standing
shareholder value proposition; strong commercial underpinnings that
generate highly transparent and low risk cash flows, establishing a
new platform for low capital intensity growth, and an attractive
financial return, all while retaining a strong balance sheet and
financing flexibility.
"This investment is also a prime example of how we're focused on
being a differentiated service provider to our customers by
lowering emissions across our systems. In line with that objective,
we expect to develop solar power capacity at the terminal site,
which will ensure it's the most sustainable export facility in
North America and support our
company-wide goal of net zero by 2050," said Monaco.
Central to the transaction, Enbridge will acquire a 100 percent
operating interest in the Ingleside Energy Center (to be renamed
the Enbridge Ingleside Energy Center (EIEC)), located near
Corpus Christi, Texas –
North America's largest crude
export terminal, which loaded 25 percent of all U.S. Gulf Coast
crude exports in 2020. This state-of-the-art terminal, built
in 2018, comprises 15.6 million barrels of storage and 1.5 million
barrels per day of export capacity.
EIEC's highly advantaged outer harbor location, with direct
connection to low-cost, long-lived supply, combined with VLCC
capability and rapid loading rates, position it as one of the most
competitive export facilities globally. EIEC is underpinned
by 925 thousand barrels per day of long term take-or-pay vessel
loading contracts and 15.3 million barrels of long-term storage
contracts providing visibility to future cash flows. Its direct
connection to globally competitive Permian and Eagle Ford basins
will assure the sustainability of cash flows for many years to
come.
Enbridge will also acquire a 20 percent interest in the
670-thousand-barrel per day Cactus II Pipeline, a 100 percent
operating interest in the 300-thousand-barrel per day Viola
pipeline, and a 100 percent operating interest in the
350-thousand-barrel Taft Terminal. Together with EIEC, these
pipeline and storage assets provide a fully integrated light crude
export platform.
The acquired assets are expected to be immediately and strongly
accretive to distributable cash flow per share and earnings per
share. In addition, ongoing EBITDA generation supports the
Company's dividend growth outlook and growing base of free cash
flow, further strengthening its sector leading financial
flexibility and preserving its $5-6
billion of annual self-funded investable financing capacity
beginning in 2022. The transaction will be initially funded with
existing liquidity and the Company anticipates that 2022 Debt to
EBITDA will be at the lower end of its target range.
This investment also provides Enbridge with further organic
growth potential supporting the Company's post-2023 growth
outlook. EIEC permitted expansions of existing storage
capacity to 21 million barrels and export capacity to 1.9 million
barrels per day, provide opportunity to capitalize on increasing
volumes and visibility to near-term low capital intensity
growth. In addition, Enbridge will hold a 50 percent interest
in a brownfield St. James
deep-water crude and refined products terminal development
opportunity, which provides longer term growth potential.
EIEC has been recently constructed to industry-leading
environmental standards designed to minimize its carbon emissions
footprint. Enbridge expects to further lower facility
emissions through the application of up to 60 MW of solar power
capabilities, leveraging over 500 acres of available land included
within the terminal. This renewable investment is expected to
well exceed EIEC's power requirements, allowing excess generation
capacity to be contracted to local industrial and refining
facilities while driving a robust return. Longer term, there
is the potential to develop additional low carbon energy
infrastructure within the facility, including renewable fuels and
carbon capture terminaling.
The transaction is expected to close in the fourth quarter of
2021, subject to customary regulatory approvals and closing
conditions. Moda's Ingleside Management and key Moda marine
terminal personnel will remain in place following closing of the
transaction, ensuring continuity of operations and ongoing
development activities.
A complete description of the transaction, along with additional
details on the acquired assets is available on the Investor
Relations section of the Enbridge Inc. website.
Barclays acted as financial advisor to Enbridge and Sidley acted
as its legal counsel.
Forward-Looking Information
Forward-looking information, or forward-looking statements,
have been included in this news release to provide information
about us and our subsidiaries and affiliates, including
management's assessment of our and our subsidiaries' future plans
and operations. This information may not be appropriate for other
purposes. Forward-looking statements are typically identified by
words such as ''anticipate", "believe", "estimate", "expect",
"forecast", "intend", "likely", "plan", "project", "target" and
similar words suggesting future outcomes or statements regarding an
outlook. Forward-looking information or statements included or
incorporated by reference in this document include, but are not
limited to, statements with respect to the following: the
acquisition of Moda Midstream Operating, LLC (the "Transaction"),
including the expected closing and the timing thereof; expected
benefits of the Transaction; expected accretion of the Transaction
to our financial outlook, including distributable cash flow per
share and earnings per share; expected cash flows; our corporate
vision and strategy; emissions reductions and targets;
expected supply of, demand for and prices of crude oil, natural
gas, natural gas liquids (NGL), liquified natural gas (LNG) and
renewable energy; financial strength and flexibility; expectations
on sources of funding for the Transaction and sufficiency of
financial resources; expected investment capacity; expected debt to
EBITDA ratios; expected organic growth potential; expected solar
power capacity and low carbon energy infrastructure potential; and
expected continuity of management and operations.
Although we believe these forward-looking statements are
reasonable based on the information available on the date such
statements are made and processes used to prepare the information,
such statements are not guarantees of future performance and
readers are cautioned against placing undue reliance on
forward-looking statements. By their nature, these statements
involve a variety of assumptions, known and unknown risks and
uncertainties and other factors, which may cause actual results,
levels of activity and achievements to differ materially from those
expressed or implied by such statements. Material assumptions
include assumptions about the following: the COVID-19 pandemic and
the duration and impact thereof; the expected supply of and demand
for crude oil, natural gas, NGL and renewable energy; prices of
crude oil, natural gas, NGL and renewable energy; anticipated
utilization of assets; exchange rates; inflation; interest rates;
availability and price of labor and construction materials;
operational reliability; customer and regulatory approvals;
maintenance of support and regulatory approvals; the timing and
closing of the Transaction; the realization of anticipated benefits
of the Transaction and other transactions; governmental
legislation; litigation; estimated future dividends and impact of
our dividend policy on our future cash flows; our credit ratings;
capital project funding; hedging program; expected EBITDA; expected
earnings/(loss); expected future cash flows; and expected
distributable cash flow. Assumptions regarding the expected supply
of and demand for crude oil, natural gas, NGL and renewable energy,
and the prices of these commodities, are material to and underlie
all forward-looking statements, as they may impact current and
future levels of demand for our services. Similarly, exchange
rates, inflation and interest rates and the COVID-19 pandemic
impact the economies and business environments in which we operate
and may impact levels of demand for our services and cost of
inputs, and are therefore inherent in all forward-looking
statements. Due to the interdependencies and correlation of these
macroeconomic factors, the impact of any one assumption on a
forward-looking statement cannot be determined with certainty,
particularly with respect to expected EBITDA, expected
earnings/(loss), expected future cash flows, expected distributable
cash flow or estimated future dividends.
Our forward-looking statements are subject to risks and
uncertainties pertaining to the successful execution of our
strategic priorities; operating performance; legislative and
regulatory parameters; litigation; acquisitions, dispositions and
other transactions, including the Transaction, and the realization
of anticipated benefits therefrom; our dividend policy; project
approval and support; renewals of rights-of-way; weather; economic
and competitive conditions; public opinion; changes in tax laws and
tax rates; exchange rates; interest rates; commodity prices;
political decisions; the supply of and demand for commodities; and
the COVID-19 pandemic, including but not limited to those risks and
uncertainties discussed in this news release and in the
Company's other filings with Canadian and United States securities regulators. The
impact of any one risk, uncertainty or factor on a particular
forward-looking statement is not determinable with certainty as
these are interdependent and our future course of action depends on
management's assessment of all information available at the
relevant time. Except to the extent required by applicable law,
Enbridge assumes no obligation to publicly update or revise any
forward-looking statement made in this news release or otherwise,
whether as a result of new information, future events or otherwise.
All forward-looking statements, whether written or oral,
attributable to us or persons acting on our behalf, are expressly
qualified in their entirety by these cautionary statements.
About Enbridge Inc.
Enbridge Inc. is a leading North American energy
infrastructure company. We safely and reliably deliver the energy
people need and want to fuel quality of life. Our core businesses
include Liquids Pipelines, which transports approximately 25
percent of the crude oil produced in North America; Gas Transmission and Midstream,
which transports approximately 20 percent of the natural gas
consumed in the U.S.; Gas Distribution and Storage, which serves
approximately 3.8 million retail customers in Ontario and Quebec; and Renewable Power Generation, which
generates approximately 1,766 MW of net renewable power in
North America and Europe. The Company's common shares trade on
the Toronto and New York stock exchanges under the symbol ENB.
For more information, visit www.enbridge.com.
None of the information contained in, or connected to,
Enbridge's website is incorporated in or otherwise forms part of
this news release.
FOR FURTHER INFORMATION PLEASE
CONTACT:
Media
Michael
Barnes
Toll Free: (888) 992-0997
Email: media@enbridge.com
Investment Community
Jonathan
Morgan
Toll Free: (800) 481-2804
Email: investor.relations@enbridge.com
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SOURCE Enbridge Inc.