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Enbridge's Q4 earnings beat, helped by new pipelines to key U.S. refining markets

Last updated: 07:56 20 Feb 2015 EST, First published: 08:56 20 Feb 2015 EST

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Enbridge (TSE:ENB) (NYSE:ENB), Canada's largest pipeline company, swung to a fourth-quarter profit, helped by construction of new oil pipelines linking Albertan crude with key U.S. refining markets.

Net income was C$88 million, or C$0.10 per share, in the October-to-December quarter, after a loss of C$271 million, or C$0.33 per share, in the year-earlier period, the Calgary, Alberta-based company said in a statement late yesterday.

Adjusted earnings increased C$0.49 per share, below the C$0.53 average analyst estimate for the measure, according to Capital IQ data.

The company's revenue rose 6.1 percent to C$8.8 billion, from C$8.29 billion.

The boost was partly the result of new income from Enbridge’s call for line fill on two of its pipeline projects–Flanagan South and the newly twinned Seaway Crude pipeline.

The completion of those two projects allowed large quantities of heavy crude oil from Alberta to flow to the U.S. Gulf Coast, the largest refining market in North America, for the first time.

“Improving market access for our customers has been a key focus of ours over the past five years and we reached an important milestone in 2014,” Enbridge chief executive officer Al Monaco said in the statement.

Enbridge is restructuring its operations after late last year announcing it would pay out more of its profits in dividends. It is also pushing billions of dollars worth of pipeline and other assets into affiliated funds and partnerships to improve the cost of funding new projects.

In December, Enbridge announced plans to transfer the majority of its Canadian liquids pipelines business and certain renewable energy assets to Enbridge Income Fund with a combined carrying value of $17 billion.

Enbridge is also reviewing a potential transfer of its interest in United States liquids pipelines assets to Enbridge Energy Partners L.P., “although the review of this transaction has not progressed to a conclusion, the company said.

Enbridge is shipping rising volumes of Alberta’s oil sands crude even as the price of the commodity has plunged. The company said about C$10 billion worth of new projects entered service in 2014 and another C$9 billion is expected to be completed this year.

“While the vast majority of Enbridge’s businesses have limited direct commodity price exposure, the recent drop in oil prices is impacting our customers,” Al Monaco said.

West Texas Intermediate, the U.S. benchmark crude, fell 42 percent in the fourth quarter, averaging $73.20 a barrel.

Enbridge competitor TransCanada (TSE:TRP) last week said fourth-quarter profit rose as the company benefited from deliveries on the southern leg of the Keystone XL pipeline.

Shares closed up less than 0.1 percent to C$61.64 in Toronto yesterday. The stock has gained 13 percent in the past six months.

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