Enbridge adjusted earnings beat expectations, but pace unlikely to last
Oil Sands crude oil ends it trip from the Athabasca region to a tank farm at the Enbridge Pipelines oil terminal facility in Hardisty, Alta., June 20, 2007. (THE CANADIAN PRESS / Larry MacDougal)
Lauren Krugel, The Canadian Press
Published Wednesday, May 8, 2013 4:20PM EDT
CALGARY -- Enbridge Inc. is seeking U.S. approval to pump more crude through an Alberta-to-Wisconsin pipeline -- a process the company expects to be easier than the one TransCanada Corp. is facing with its Keystone XL pipeline.
"I think I'd point out that this is a little bit of a different situation," Enbridge CEO Al Monaco told analysts on a conference call Wednesday to discuss the company's first-quarter results.
Enbridge (TSX:ENB) won't be laying down any new pipe to boost the Alberta Clipper pipeline's capacity from 450,000 barrels per day to 800,000 barrels per day by 2015. Rather, capacity will be expanded by adding new pumping equipment to the existing line in two phases.
"We're talking about a relatively limited amount of work here from an environmental point of view and from an equipment point of view," said Monaco.
Keystone XL, on the other hand, involves building new pipe through the American heartland. Much of the controversy has been centred around Nebraska, where TransCanada was forced to reroute the line to avoid ecologically sensitive areas.
TransCanada (TSX:TRP) hopes to obtain its presidential permit -- a requirement for pipelines that cross the Canada-U.S. border -- some time later this year after years of delay.
Enbridge already has a presidential permit for Alberta Clipper, which it is looking to amend.
"Obviously there's no questions as to routing implications, because the pipe is already there. It's in the existing right of way and what we're talking about is some additional station work," said Monaco.
While work on the pipeline itself might be less complicated in the case of Alberta Clipper than Keystone XL, Monaco doesn't deny that there will be "some focus" from environmental groups.
Much of the opposition to these projects has been less about the pipe itself than what would flow inside of it. Many environmentalists are opposed to pipelines such as Keystone XL on the grounds that they would enable greater development of Alberta's oilsands, which they consider a particularly dirty source of crude.
Earlier Wednesday, Enbridge reported higher first-quarter adjusted earnings that beat expectations, but warned it doesn't expect that pace to last.
The pipeline company posted profits of $488 million, or 62 cents per share -- beating the average analyst estimate by 10 cents per share, according to Thomson Reuters.
During the same period a year earlier, Enbridge earned $373 million, or 49 cents per share.
"Although we're pleased with that result, we don't expect this pace will be maintained through the year," Monaco told analysts.
"As a result we're holding our (earnings per share) guidance range at $1.74 to $1.90 a share and if we're able to achieve the mid-point of this range it would represent a 12 per cent increase over 2012."
Enbridge's net earnings, a measure that includes one-time items such as hedging gains and losses, were $250 million, or 31 cents per share, compared with $261 million, or 34 cents per share a year earlier.
Revenue for the quarter totalled $8.02 billion, up from $6.63 billion in the first quarter of 2012.
Enbridge's Northern Gateway pipeline -- a contentious proposal to ship oilsands crude to the West Coast for export -- was scarcely mentioned on the analyst conference call.
However, it's expected to be a focus at Enbridge's annual general meeting in Calgary later Wednesday, where several project opponents are expected to speak.
John Ridsdale, hereditary chief with the Wet'suwet'en First Nation, said the project is as good as dead, but it's important to keep up the pressure on Enbridge.
"If we don't constantly give them the message, they'll be out there telling the public and making public perception that it is a done deal, when in fact it is far from being done, far from being approved and far from being a good investment for shareholders," he said.
For the past few years, retired CEO Pat Daniel was the one to field questions from Northern Gateway opponents at Enbridge's annual meeting.
This year, Monaco will face shareholders for the first time as chief executive.
"I think it's interesting that Al Monaco has said that he's prepared and recognizes the need to seek social licence," said Karen Tam Wu, with environmental group Forest Ethics.
"I think what we really need to reiterate to him is that social licence."