Enbridge ENB reported another strong quarter Wednesday, with adjusted earnings up 77% year over year to CAD 152 million, and raised its full-year adjusted earnings forecast range to CAD 2.30-2.36 (from CAD 2.18-2.32). Our forecast captures growth of this magnitude this year and solid growth over the next several years as management continues to execute on low-risk internal growth projects, so we are reaffirming our fair value estimate. Reported earnings show an even rosier third quarter, but we look at the adjusted figure to remove noise mainly from foreign asset sales and noncash mark-to-market impact from derivatives used for hedging purposes. Liquids pipelines, Enbridge's largest segment, turned in adjusted earnings of CAD 119 million, a 61% increase from the prior-year quarter. The bulk of the increase came from allowance for equity funds used during construction, which allows Enbridge to recognize returns on major pipeline projects in progress, primarily on the Enbridge and Southern Lights systems. Liquids volume increased 4.2% year over year, with increases on all pipeline systems. Natural gas volume at Enbridge Offshore Pipelines increased thanks to growth projects such as the Shenzi lateral, helping drive up gas pipelines' adjusted earnings to CAD 17 million from CAD 10 million in the year-ago period. The other major earnings driver was the sponsored investments segments, which saw adjusted earnings of CAD 41 million compared with CAD 23 million in the prior-year quarter, thanks predominantly to Enbridge's larger stake in Enbridge Energy Partners EEP as well as growth projects and tariff increases for EEP's pipelines.Internal growth opportunities continue to materialize, with a few new projects announced in October. Enbridge added plans to build Big Foot, a $250 million ultra-deep-water crude pipeline in the Gulf of Mexico. This, along with the recently announced $500 million Walker Ridge Gathering System, solidifies Enbridge's leading position as a pipeline builder and operator in the Gulf. On the green energy front, Enbridge announced an agreement with First Solar FSLR to develop a 20-megawatt solar project near Sarnia, Ontario. We point out these projects because they span three of Enbridge's operating segments and all offer the low-risk economics Enbridge continues to stress, which should support earnings stability over time.
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Analyst Notes
07-29-09 | 10:39AM Enbridge Reports Strong 2Q
05-06-09 | 3:44PM Enbridge Reports Strong 1Q
07-29-09 | 10:39AM Enbridge Reports Strong 2Q
07-20-09 | 9:43AM Enbridge to Assist EEP with Alberta Clipper
05-06-09 | 3:44PM Enbridge Reports Strong 1Q
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Enbridge, Inc. Full Analyst Report
Analyst Notes
07-29-09 | 10:39AM Enbridge Reports Strong 2Q
05-06-09 | 3:44PM Enbridge Reports Strong 1Q
07-29-09 | 10:39AM Enbridge Reports Strong 2Q
07-20-09 | 9:43AM Enbridge to Assist EEP with Alberta Clipper
05-06-09 | 3:44PM Enbridge Reports Strong 1Q
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