Commenting on the strategic plan and outlook, Al Monaco, President and CEO of Enbridge noted: “2018 has been a year of significant accomplishments for our Company. We shednon-core lines of business,de-levered the balance sheet, advanced our secured growth projects, streamlined our corporate structure, and with all that we expect to generate DCF per share in the upper half of our 2018 guidance range and maintain our previous three-year guidance range through 2020.”
“Our strategic positioning as alow-risk regulated pipeline and utility business, combined with the strategic priorities we established last year, are bearing fruit. We will remain focused on these priorities while placing an even greater emphasis on capturing the very best of a large suite of potential organic growth opportunities that we see being driven by our great strategic position and excellent energy fundamentals, particularly growing energy exports from North America.
“We’ll continue to apply the same type of discipline around capital allocation that we exercised this year as we created financial flexibility by selling assets that weren’t core to our strategy at strong valuations.
“We’ll also look to continue to optimize the performance of our core business. It’s a top priority to further extend the consistent long-term growth track record of our Liquids business by providing newwin-win tolling options andlow-cost throughput enhancements on our Mainline.”
In summarizing the strategic update, Mr. Monaco commented, “We will stay focused on our strategic priorities as we look to build on the success of 2018. We’re confident ourbest-in-class assets andlow-risk business model will generate shareholder value as we continue to deliver on our plans.”
Guidance, Dividend Increase and Long-Term Growth Outlook
Enbridge continues to expect 2018 DCF per share in the upper half of its guidance range of $4.15 to $4.45 per share. The 2019 and 2020mid-point of the projected range of DCF is unchanged from last year at $4.45 per share and $5.00 per share, respectively. With this robust outlook, Enbridge has announced a 10% dividend increase for 2019 and anticipates another 10% increase for 2020. The 2019 quarterly dividend of $0.738 per share will be payable on March 1, 2019, to shareholders of record on February 15, 2019.
Beyond 2020, Enbridge is targeting to achieve annual DCF per share growth in the range of5%-7%, driven by an attractive suite of organic growth prospects within its three core businesses that can be self-funded using available cash generated by these businesses and managing leverage within targets designed to maintain strong investment grade credit ratings.
Liquids Mainline Tolling and Pipeline Throughput Enhancements
Enbridge is working hard to provide solutions for Western Canadian pipeline capacity shortages while offering shippers greater long-term certainty. The company is in discussions with its shippers for a new Mainline tolling agreement to replace the current10-year Competitive Tolling Settlement (CTS) that expires inmid-2021. Key features of the toll proposal under discussion include priority access for contracted volume, contract terms of up to 20 years, and spot capacity availability of at least 10%. Discussions will continue in 2019 with a targeted implementation date aligning with the expiry of the CTS agreement inmid-2021.
Enbridge is also developing severallow-cost throughput enhancements as potential solutions for the Western Canadian crude oil transportation bottleneck. The Company believes that it can increase throughput by 50 to 100 kbpd on a short-term basis by the end of the first half of 2019. Completion of the Line 3 replacement project will create another 370 kbpd of capacity late next year. Beyond that, the Company is advancing another 450 kbpd of throughput optimization initiatives, capacity restoration and supply access for Western Canadian Sedimentary Basin barrels.
