Q3 2024 Enbridge Inc Earnings Call
Good morning, and welcome to the Enbridge third quarter 'twenty 'twenty four financial results.
Speaker Change: My name is Rebecca Morley and I'm, the vice President of Investor Relations.
Speaker Change: Joining me this morning are Greg Evo, President and CEO Pat Murray.
Vice President and Chief Financial Officer, and the heads of each of our business.
Speaker Change: Brendan.
Speaker Change: Cynthia Hudson gas transmission and midstream shown here it is yes.
Speaker Change: And in storage and renewables.
Speaker Change: The power.
At this time all participants are in listen only mode. Following the presentation well conduct a question and answer session.
Speaker Change: Excuse me.
Speaker Change: If you would like to ask a question during this time simply press.
Speaker Change: Star followed by the number one on your telephone keypad, if you would like to withdraw your question. Please.
Speaker Change: Note that this conference is being recorded.
Speaker Change: This call is being webcast and I encourage those listening on the phone to follow along with supporting slides.
Speaker Change: We're trying to keep the call to roughly one hour and in order to answer as many questions as possible well be limiting questions to one plus a single follow up if necessary.
Speaker Change: Do you prioritize questions from the investment community. So if you're a member of the media. Please direct your inquiries to our communications.
Speaker Change: We will be happy to help you.
Speaker Change: As always our Investor relations team will be available following the call for any follow up questions.
Speaker Change: On slide two where I'll remind you that we'll be referring to forward looking information on today's presentation and Q&A.
Speaker Change: By its nature, this information and forecasts assumptions and expectations about future.
Speaker Change: Which are subject to the risks and uncertainties outlined here and discussed more fully in our public disclosure.
Speaker Change: Well also be referring to non-GAAP measures summarized below.
Greg Evo: I'll turn it over to Greg.
Greg Evo: Well, thank you Rebecca and good morning, everyone. Thanks for joining us on the call today and I'm pleased to be here to recap another strong quarter.
Greg Evo: Before I get into the quarterly update I want to acknowledge everyone affected by this.
Greg Evo: Impacts caused by Hurricane Harvey and.
Greg Evo: No.
Greg Evo: Extend our sympathies to our partners, our customers and the communities impacted and wish to reiterate enbridge is a commitment to support them. During this challenging time.
We've seen limited interruption of operations and no material financial impact.
Greg Evo: It remains our number one priority and then shrink communities.
And reliable energy necessary for everyday activities.
Greg Evo: Now onto the quarter I'll start by sharing some highlights from Q3 and I'd like to spend a minute or so highlighting enbridge value proposition and how we are positioned to return capital to shareholders.
Greg Evo: Elders in all market cycles.
Greg Evo: I will then review how Enbridge is ideally situated.
Greg Evo: Increasing gas demand stemming from data centers electric power LNG coal retirement and industrial growth.
Greg Evo: I'll also provide updates from our business units before turning it over to Pat.
Greg Evo: Pat will walk you through our third quarter results key drivers supporting our reaffirmed financial outlook and our capital allocation priorities.
Greg Evo: I will then close with a few key messages to highlight some important events coming up on the calendar.
Greg Evo: Our presentation Enbridge management team will be pleased to answer any questions you may have.
Speaker Change: Throughout the third quarter Atkins again experienced strong utilization across the business, which drove solid financial results.
Speaker Change: Well position to deliver full year results near the top end of our EBITDA guidance.
Speaker Change: DCF per share we continue to expect to be near the midpoint of the range. Despite fully pre funding utilities acquisition before they're closing.
Speaker Change: Our leverage is within our target range of 455 times debt to EBITDA after closing TSMC.
Speaker Change: And we expect to trend down over the next few quarters.
Speaker Change: With the acquisitions closed in the funding completed we have successfully concluded the acquisition of three U S gas utilities, which perfectly fit enbridge is low risk business model and so we have returned to an equity self funded model.
Speaker Change: This has been a well executed major transaction that investors will benefit from for years to come.
Speaker Change: In liquids, we closed the previously announced acquisition of additional dock and land adjacent to our state of the art crude export facility at Ingleside.
Speaker Change: Continue to see high utilization and expect to unlock future growth opportunities there.
Speaker Change: Cross the businesses, we're on track to place $5 billion.
Speaker Change: <unk> capital into service in 2024.
Speaker Change: On growth the team has done a great job and I'm pleased to highlight for new accretive investments in growth.
Speaker Change: Transmission, we further executed our Permian strategy by acquiring a 15% interest in the highly contracted PBR gathering system.
Gastric to enhance our natural gas value chain.
Speaker Change: <unk> is a key feeder system for the pipeline.
Speaker Change: And renewable power, we sanctioned Sequoia solar and up to 815 megawatt project in Texas is backed by long term ppas with AT&T and Toyota.
Speaker Change: Vast majority of production.
Speaker Change: We're also excited to announce participation.
Speaker Change: The third and final phase of Fox World Solar following a successful completion of the second phase during the quarter.
Speaker Change: Gas transmission, we also sanctioned offshore oil and gas pipelines to serve GPS new deepwater U S. Gulf of Mexico development. All in all we've added $7 billion to our secured growth program. So far this year.
Speaker Change: As you can see our scale and connectivity continue to provide competitive advantages and sanctioning new opportunities.
Speaker Change: This growth in our business continues to underpin our stable and growing dividend.
Speaker Change: At Enbridge.
Speaker Change: Bill a low risk business that is designed to succeed in all market cycles. This is how we've been able to deliver growing dividends for 29 years, making us one of the very few dividend aristocrats.
Speaker Change: Looking longer term, we expect to steadily grow the business by 5% annually and we will remain financially disciplined support sustainably returning capital to shareholders.
And branch offers an attractive dividend.
Speaker Change: That's above the return of many alternative investments.
Speaker Change: The Canadian and U S 10 year treasuries are sitting at about three 4% perspective.
Speaker Change: While broad equity indices like the TSS six TNF 100 are at approximately three and 1% respectively.
Speaker Change: It's worth noting key drivers that enable us to be considered a dividend aristocrat and underpins that 2019 years of dividend growth.
Speaker Change: Our highly contracted cash flows experienced minimal volatility, allowing us to predictably.
Speaker Change: And growth in dividend.
Speaker Change: Investment great credit ratings across the four major rating at Haile.
Speaker Change: I think the strength of our balance sheet and the low risk nature of our businesses.
Speaker Change: We have negligible commodity price exposure, which sets us apart from many of our midstream peers.
Speaker Change: And then on EBITDA growth, we expect that to be higher through the next few years at 79% due to base business performance new assets entering service tuck in M&A and contributions from the acquired utility.
Speaker Change: Enbridge outpaces Canadian large peers by making up approximately 10% of the total dividends paid by the <unk> 60 companies today also.
Speaker Change: Our business is designed to succeed in all market cycles and deliver predictable results.
Speaker Change: Despite a volatile world Edwards is seeing increased visibility of our long term growth supported by strong energy infrastructure fundamental and in particular rising power demand.
And branch is well positioned conserve increased gas and power demand over the next decade.
Speaker Change: S&P is forecasting a 20 bcf per day of incremental gas demand growth by 'twenty three.
Speaker Change: Situated to participate in new growth opportunities related to this increased demand.
Speaker Change: Our cast footprint within 50 miles of approximately 45% of all gas fired generation in North America today.
Speaker Change: Fortunately for investors today.
Speaker Change: Already sanctioning additional growth opportunities to support natural gas power demand like our Tennessee reach line pressure, where we're investing $1 $1 billion U S to expand our east, Tennessee pipeline to support <unk> planned retirement of nine coal fired units in favor of one five gigawatts.
Speaker Change: Gas fired generation.
Speaker Change: Our utilities are situated in high growth markets with North Carolina being a top destination for onshoring due to its affordable power and favorable corporate tax rates.
Speaker Change: In that regard Enbridge gas, north Carolina's investing $600 million U S to expand our gas lines.
Speaker Change: Roxborough gas fired generation plant, which will have capacity of at least one four gigawatts.
Speaker Change: We expect that project to be completed in 2027.
Speaker Change: We also have exciting developments within our renewable segment with over two gigawatts in development or under construction across the U S.
Speaker Change: Beyond the electric power sector, we on over 628 Bcf of strategically located natural gas storage and this position is growing.
Speaker Change: Our portfolio represents 25% of U S Gulf Coast Deliverability, and we are the only underground natural gas storage facility in British Columbia.
Speaker Change: Provide central flexibility for Canadian LNG.
Speaker Change: Operations.
Speaker Change: Of course, our great Big storage position of 300 Bcf of Dod is a critical hub for North American natural gas users like power generators utilities and continues to expand each year.
Speaker Change: John represents over 20% of deliverability in the region.
Speaker Change: On the LNG front, our pipelines are strategically connected to more than 30% of existing and announced LNG export capacity will continue to serve global demand growth.
Also have a preferred interest in wood fiber LNG, which is expected to be the world's first net zero export facility.
Speaker Change: Utilizing hydropower and is expected to produce two 1 million tons per annum.
Speaker Change: Now, let's jump into the exciting updates in each of the business units starting with liquids.
Speaker Change: Your line is on track to exceed our full year forecast of 3 million barrels per day.
Speaker Change: Was it a portion of it in July and August and we continue to see strong customer demand evidenced by the fact that the mainline is back in a portion of it for November.
Speaker Change: We are advancing discussions with customers for additional western Canadian sedimentary basin pipeline capacity in 2026 and beyond.
Speaker Change: You should think of these as brownfield opportunities that can be very capital efficient and provide customers with critical insurance acreage to deliver barrels to downstream markets.
As producers grow into available egress out of Western Canada. We've also recently started advancing a number of capital efficient low multiple expansion opportunities on our regional oil sands pipes in the Permian, We continue to see strong volumes this quarter and NGO side, we set a single day volume record of $2.
Speaker Change: 6 million barrels and a monthly average record of $1 2 million barrels per day. It's noteworthy single side recently hit 3 billion with a b barrels of volumes exported underscoring the competitive advantage of.
Speaker Change: The facility and strong customer demand that attracted us to purchase of the facility in 2021.
Speaker Change: We're seeing continued growth there $2 5 million barrels of storage under construction.
Speaker Change: Service is expected in 2025.
Speaker Change: We also closed the acquisition of new Docs and adjacent lands at Ingleside, which will provide further growth opportunities and allow us to optimize existing dock capacity.
Speaker Change: Work is already underway to integrate these new assets.
Now, let's look a little deeper at our gas transmission business.
Speaker Change: I'm excited to highlight how we are connecting supply to key demand centers and extending our Permian natural gas value chain.
Speaker Change: Close to $1 billion in onshore pipelines during the quarter to therapy as new deepwater development plans in the call.
Speaker Change: These pipeline strengthen and diversify our offshore business, while expanding our footprint in the region.
Speaker Change: Backed by long term contracts with in service expected in 2029, adding secured capital to our backlog at the end of the decade.
Speaker Change: We acquired a 15% interest in the <unk>. It extends our natural gas value chain and further demonstrates the strategic value and growth opportunity.
Speaker Change: Unlock through the list of our JV, we announced earlier this year.
Speaker Change: As a reminder, we also previously announced sanctioning the Blackstone pipeline, which will add up to two 5 billion cubic feet per day of egress for our Permian customers and growing natural gas demand in the area of 2026.
Speaker Change: We are progressing well and up six five bcf expansion at our Tres Palacios gas storage.
Speaker Change: We acquired in early 2023, and an attractive price.
Demand for our re contracting continues to increase and since acquisition rates have about doubled for the strategically located assets, providing accretion beyond our original model expectations.
Speaker Change: The <unk> extension project, which serves venture Global's Plaquemines LNG export facility is now flowing gas and we expect it to be fully in service by year end.
Speaker Change: So now let's move on to our gas distribution segment.
Speaker Change: As I mentioned earlier, we have now welcomed all three U S gas utilities Index bridge and I couldnt be more proud of the team's dedication and commitment to execution.
Speaker Change: We are now the largest natural gas utility in North America, delivering over 9 billion cubic feet per day, and serving approximately 70 million customers.
Speaker Change: Thats been hard at work integrating each of the utilities and we expect that to continue in the months ahead.
Speaker Change: With our four utilities now in house, so I thought I'd spend a minute highlighting the key growth drivers across the franchise.
Speaker Change: Carrier, we expect new customer hookups at additional power generation to drive growth, including new investment in storage and transmission.
Speaker Change: The utility has a strong track record of predictable growth and consistent returns.
Speaker Change: The Ontario government just released their long term vision for the provinces energy industry and future in response to the Isis updated demand forecast, which predicts a 75% increase in electricity demand by 2050.
Speaker Change: We are pleased to see the minister of energy acknowledging the vital role natural gas plays in Ontario's first integrated energy resource plan to ensure customer affordability and reliability industrial residential commercial and agricultural sectors.
Speaker Change: In combination with <unk> forecast, we believe the Enbridge gas, Ontario is prime to benefit from major tailwind gas demand.
Speaker Change: Private skins, procuring up to 1300 megawatts of new gas fired generation and have reported that there are over 7000 megawatts of datacenter interconnection acquired threes across more than 30 unique sites.
Speaker Change: Hi, Brooks will largely be driven by pipeline replacement modernization and system enhancement under programs such as the pipeline infrastructure replacement plan.
Speaker Change: Over 80% of capital splits, Ohio is expected to peak cycle under these rider programs and provide attractive risk adjusted returns that said, we are also evaluating opportunities to serve new demand related to data centers.
Speaker Change: Natural gas power plant expansion.
Speaker Change: Growth in Enbridge cash, Utah will be driven by increased population is data center power demand and modernization of the systems.
Speaker Change: We're excited about the data center opportunities, we're seeing there so far we've recently contracted supply to serve 200 megawatts of power for data centers and are evaluating inquiries for another 600 megawatts.
Speaker Change: Finally, enbridge gas North Carolina has a very healthy population growth and we'll be expanding to serve dukes. One four gigawatt foxboro gas fired generation plant, which I mentioned, a few minutes ago and constructing two bcf LNG facility for system reliability.
Speaker Change: North Carolina is also opportunity rich as the state is positioned to be one of the primary beneficiaries.
Speaker Change: <unk> of growth from onshoring of manufacturing the region overall.
Overall, we see an average 8% annual rate base growth across our U S gas utilities over the coming years.
Speaker Change: Now, let's turn to the renewables business, our strategic and disciplined approach has resulted in sanctioning additional growth.
Speaker Change: Chip partners.
Speaker Change: We're excited to announce that the phase III of flexible solar project phase III is under construction and is expected to be in service by year end.
Speaker Change: Consistent with the other phases phase III is backed by a long term PPA with Amazon for 100% of energy production.
Speaker Change: We also sanctioned the approximately 800 megawatt <unk> solar project in Texas with a staggered and service date expected 25, and 26. This will be one of the largest solar facilities in North America by capacity and is backed by long term ppas with AT&T and Toyota for substantially.
Speaker Change: All of the production.
Speaker Change: This marks further execution on the opportunities laid out at Investor day, as we developed two gigawatts of renewable projects in service dates by the end of 2026.
Speaker Change: Our customer relationships and disciplined track record development.
Speaker Change: And AG contracting should allow us to continue delivering solid growth in this segment with strong risk adjusted returns with this will turn it over to Pat to discuss our third quarter financial results.
Pat Murray: Thanks, Craig and welcome everyone continued strong demand across our asset base drove record third quarter EBITDA and we are ship per share of $1 19, which includes the impact of pre funding of the U S gas utilities.
Pat Murray: Liquids EBITDA is up year over year, primarily due to the first of our annual Opex inflation empower cost escalators, which increase the mainline Paul as a reminder, due to take effect on July one each year.
Pat Murray: Our gas transmission business is up compared to last year. Despite the sale of our interest in alliance with our stable. This was driven by the acquisition of Tomorrow.
Pat Murray: A 19% interest in the winter joint venture and our gas storage assets outperforming.
Pat Murray: Continue to see solid demand for our gas storage and benefit from elevated rates in the contracts we entered into since last year.
Pat Murray: I'm also happy to announce that we once again have re contracted a 100% of our GPM evergreen contracts illustrating the high demand for these great assets.
Pat Murray: Our gas distribution business includes a full quarter of EBITDA for both Enbridge gas, Ohio, and Emirates gas, Utah, which drove the majority of the step up in 2023.
Pat Murray: Our renewables business development fees in the third quarter of 2023, which can be lumpy and the absence. This quarter is driving the decrease year over year.
Pat Murray: Below the line higher maintenance capital from the U S gas utility acquisition wells higher interest expense and weighted average shares from the associated pre funding of those same U S gas utility.
Pat Murray: All in all our third quarterly results have set us up to achieve our guidance range for the 19th consecutive year.
Pat Murray: Let's dive a little deeper into that guidance.
Pat Murray: As a reminder, we recast our financial guidance in the second quarter include the U S gas utilities and I am pleased to reaffirm those ranges for both adjusted EBITDA and DCF per share in fact, we expect to close 2024 with another quarter of strong operating performance, which would push enbridge near the top of our keeping our guidance range.
DCF per share we expect to finish the year around the midpoint of guidance, which is a great outcome and you can see.
Pat Murray: <unk> the pre funding of the utility acquisitions, we did this year, while not benefiting from a full year of EBITDA.
Pat Murray: Looking ahead full year utility contribution.
Pat Murray: The continued operational excellence and in footprint initiatives should drive growth over the near and medium term.
Pat Murray: Our balanced and diversified secured backlog sits at 27 billion today, and we expect to place approximately $5 billion of that in service by the end of 2020 for both projects are expected to drive new EBITDA and underpin our near term growth payments through 2020.
Pat Murray: Now, let's turn to our capital allocation priorities.
Pat Murray: Our capital allocation philosophy is guided by our financial Guardrails, which remains firmly in place our target leverage of four five to five times, the sweet spot for Enbridge and the DCF payout of 60% to 70% aligns with our cash flow oriented view of the business.
Pat Murray: We're proud of our dividend aristocrat status.
Pat Murray: A hallmark of our value proposition and growing our dividend annually is a key consideration when deploying our $8 billion to $9 billion of annual growth investment capacity.
Pat Murray: For the next few years, we've earmarked approximately $7 billion in the form of low capital intensity expansion modernization capital and rate base investments.
Pat Murray: The remaining $2 billion to $3 billion of investment capacity can be opportunistically deployed either into new accretive organic projects.
Pat Murray: Our debt reduction.
Pat Murray: Within that framework to capitalize on the best available opportunities within our equity self funding model.
Pat Murray: Our outlook and growth will continue to revolve around low risk long life investments that support ratable dividend increases.
Pat Murray: Again, thank the teams for their hard work this quarter, bringing the last of the LDC and ensuring another great operational and financial showing here at Enbridge.
Speaker Change: I'll pass it back to Greg finish up the presentation.
Greg Evo: Very much pad enbridge continues to be positioned to succeed in all market conditions with a low risk business model and visible growth outlook the.
Greg Evo: The scale and diversification of our business is driving key competitive advantages across complementary business franchise.
Greg Evo: Our businesses are already in front of us and will continue to be in front of dramatic secular changes in power demand, both gas and renewables reindustrialization in the key jurisdictions, we serve in North America and of course growing energy exports from North America.
Greg Evo: Our industry, leading asset footprint and a solid track record of execution has allowed us to take advantage of attractive growth opportunities to meet rising global demand for energy.
Greg Evo: Returning capital to shareholders through a sustainable and growing dividend continues to be a core pillar of our value proposition and positions us as a first choice investment opportunity.
Greg Evo: Now before I turn it over to the operator for questions I'd like to share that data with some exciting events coming up on the calendar.
Greg Evo: We expect to issue a news release with our 2025 financial guidance on December three 2024, and then on March four 2025, we will be hosting our annual Investor Day in New York and we hope that you can alternate its in person.
Greg Evo: With that I'd like to thank you all for listening and operator, please open the lines for questions.
Speaker Change: Standby will be prepared for the question and answer session.
Speaker Change: Thank you we will now begin the question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue. If you would like to withdraw your question simply press Star one again.
Speaker Change: Your first question comes from the line of Jeremy Tonet from Jpmorgan. Your line is open.
Speaker Change: Hi, good morning.
Speaker Change: <unk>.
Speaker Change: Yes.
Just wanted to start off I guess looking down the future you outlined some of the expansion potential for the mainline but it seems like we.
Speaker Change: Filled up pretty quick here, just wondering I guess, what's possible on egress front down the road as that seems like producers are eager to fill any space you can provide.
Hey, good morning, Jeremy it's call. It Yeah I think your read is right on this.
Speaker Change: Production is ramping.
Speaker Change: Nicely and yes, we are back into a portion of it here in November.
Speaker Change: I don't expect to see an unfortunate every month going forward here, but seasonally I think youre going to see a lot of demand for the mainline.
Speaker Change: And we have commenced commercial discussions with industry, who spent the quarter engineering.
Speaker Change: The expansion is really more of an optimization I think it's not a trenching or a new path.
Speaker Change: In the right away and in terminals.
Speaker Change: And quite executable so.
Speaker Change: I'd say.
Speaker Change: Early response from industry is quite positive for obvious reason as Greg said in his remarks.
Speaker Change: And I think as everybody knows the last barrel.
Speaker Change: Egress.
Speaker Change: All 5 million barrels in the basin. So it's very.
Speaker Change: Economically important.
Speaker Change: The basin is not constrained so we are continuing to develop that.
Speaker Change: It's trending the right direction.
Speaker Change: I don't think we have any capital cost estimates for you at this point to refine those a little bit but.
Speaker Change: Looking at the in service dates in late 'twenty six 'twenty seven.
Speaker Change: The other nice thing I would add to that Jeremy is that there'll be.
Speaker Change: Very solid from a multiple perspective, the build multiple perspective, which obviously means the returns will be.
Speaker Change: Very satisfactory for both us and investors.
Speaker Change: That's great to hear thank you for that and then pivoting to the LDC side now that Enbridge has the largest.
Jeremy Tonet: Natural gas LDC in North America that we can tell just wondering how you think about future growth here, obviously, a lot of organic initiatives that can.
Speaker Change: It can be had on your existing platform, but we also see some other LDC assets on the block out there for sale.
Speaker Change: Do you think about organic versus inorganic growth going forward.
Speaker Change: Hey, just to start Jeremy Thanks for the question Michelle is here. So I'll, let her go at that in terms of other Ldc's look we've made some big purchases here with three of what we think are the best ones out there. So I would say our focus is very much on integration of these three and not looking at other LDC is that at this point.
Speaker Change: Time, but.
Michele: But in terms of the growth maybe I'll turn it over to Michele Yeah. You bet. Thanks. Thanks, Jeremy So first I think what I have to have to say now being able to really look under the hood as these beyond what we did through the due diligence period. These are every bit as good as we thought what they were in terms of the utilities. They are just excellent utilities in great jurisdictions that really.
We are focused on the <unk>.
Access to affordable energy driving their economic growth and thats that means that.
Michele: We're really well positioned for growth.
Michele: Greg outlined the different ways that we see them growing in terms of population growth Super strong in places like Utah and North Carolina are.
Michele: Strong modernization program with quick capital.
Michele: In Ohio.
Michele: I think we also talked about our <unk>.
Michele: Projects that we have going on in North Carolina, I would say all of those we knew as we went into the big thing Thats come up in the in the last year that really didn't factor in is the data center growth that were seeing and thats coming across the board.
Michele: I think last quarter, we mentioned 50 megawatts, we had signed up in Utah.
Michele: At least the gas to produce at 50 megawatts and that's been increased another 200 megawatts in terms of the gas to.
Michele: To produce that and lots of it inquiries along that they call. It the Wasatch front. So that's salt Lake Provo area. Similarly, North Carolina baked Decarbonization program from two lots and lots of data centers going into that Raleigh Tech hub and even in Ohio, where we thought it was a little further out we're just seeing that demand for power and then of course in our.
Original utility in Ontario, as Greg mentioned, 75% growth by 2050.
Michele: Government and administer of energy, that's very clear about the need for all of the above when it comes to energy and the need for natural gas as meeting part of the generation that they're looking for from the what's been the largest ever procurement in the Ontario is history. So we're feeling very good about that growth, yes. So Jeremy the only other thing I'd add is that it.
Michele: 8% rate base growth, we talked about a year ago remember that did not take into account, we did to have knowledge or good insight into some of the benefits. We're seeing from data centers power growth Reindustrialization reassuring. So obviously I'll be looking for Michelle and the team to even do better than what we originally thought.
Speaker Change: Got it that's good to hear thank you.
Michele: Thanks.
Speaker Change: Your next question comes from the line of Robert <unk> from CIBC. Your line is open.
Speaker Change: Hey, good morning, everyone I'd like to start with the rate of capital deployment into onshore renewables, particularly in the U S.
We've accomplished a lot in a short period of time, but I'm wondering how much capital is needed to be deployed to.
Speaker Change: Meaningfully bridge the gap between EBITDA and the DCF per share growth rate understanding that these investments.
Speaker Change: And on their own merits and not just for the tax attributes.
Yeah, Thanks, Rob it's Matthew.
Matthew: Really really pleased with their progress as you noted.
Matthew: On the onshore and I think our pivot there is really paying off we've got a lot of great projects and as I said at Investor Day.
Matthew: Especially in solar Theres this rich theme here, where.
Matthew: Power prices went down quite a lot and so companies like ours that had interconnection agreements ready to go projects are capitalizing on the very high demand out there not only from data centers, but all kinds of blue chip corporate.
As you see here, we got AT&T in Toyota.
And the <unk> project.
Matthew: And there's lots of great data center conversations going on as you can imagine so we're.
Matthew: We're really able to capitalize on that and achieve returns frankly above what we even expected on needs. We're talking like mid teens type returns.
Very solidly accretive right out of the chute quick cycle capital on these.
Matthew: We're going to be bringing these in service starting in next year.
Matthew: So we're not tying up a lot of capital for a long period. So look. This is this is really beneficial across the board and we got a good pipeline behind US we've probably got another couple of Gigawatts here any way that we can rollout.
Greg Evo: Our rollout into the strong demand and strong return environment, Robert I wouldn't it's Greg I wouldn't downplay the tax benefits too right I mean that does get to your per share metrics. So everything that Matthew sets Bang on but.
Greg Evo: We look at it from both from an EBITDA perspective, but obviously, the bottomline impact as well right.
Scott: Thanks Scott.
Speaker Change: Yes, that's what I was getting at it seems like Theres, an opportunity to bridge the gap between your Lora DCF per share.
Scott: Outlook and what you have on the EBITDA on the EPS front, but.
Speaker Change: Yeah.
Speaker Change: Second question I had is maybe for calling we've been hearing reading.
Bob: Reports Bob.
Speaker Change: Potential additional asset sales to indigenous groups and I'm wondering if there was any update for us there.
Speaker Change: Yes, thanks, Robert so.
Speaker Change: As you know Enbridge is committed to reconciliation and.
Speaker Change: That's a success.
Speaker Change: <unk> with communities already I think we have three partnerships.
Speaker Change: Working on some other ones.
Speaker Change: We're early innings on the one <unk>.
Speaker Change: <unk>.
Speaker Change: Picked up so I'd now ask you to be patient with us we're going to we're going to work through it but.
Speaker Change: You can probably imagine.
The types of.
Speaker Change: Relationships and.
Communities, we're dealing with.
Speaker Change: So.
Speaker Change: And there is a capital recycling element to it intuitive swallow right. So.
Speaker Change: We're excited about it we will keep working it but please be patient with us.
Speaker Change: Okay. Thanks very much.
Robert Greg: Thanks Robert.
Speaker Change: Our next question comes from the line of Ben Pham from BMO. Your line is open.
Ben Pham: Alright, Thanks, good morning, maybe just.
Ben Pham: Go back to the.
Ben Pham: The comments on the stellar returns.
Ben Pham: The mid teen.
Ben Pham: Can you can you clarify that because we're hearing the ministry on renewable side that returns in store have been quite challenging within the renewable technologies I know you referenced and all prices, but does that does that more exclusive to enbridge there.
Speaker Change: Well I think thanks, Ben it's not few again, so I think it really depends how you are positioned in.
Speaker Change: It's a couple of things one is having the interconnection agreements.
Speaker Change: The other is being able to navigate the supply chain and companies like ours that are large and.
Speaker Change: The supply chain wants to do business with us.
Speaker Change: Very solid terms and conditions there.
Speaker Change: And the buyers to these are the kinds of buyers. This is enbridge type customers.
Speaker Change: These large data center type customers and Blue chip corporate.
Speaker Change: They're going to want to do business with us and so we think we got.
Industry best in class terms and conditions.
Speaker Change: We also know how to build and operate stuff efficiently. So all that combined Ben I'm not sure. What you are hearing, but youll see these are going to be right out of the chute.
Speaker Change: Very cash flow accretive.
Speaker Change: And kick out great returns.
Speaker Change: Over the life of the project. So I think that mid teens return level is solidly in Snyder.
Ben Pham: Okay, that's good to hear.
Speaker Change: And maybe on the regional pipeline expansion commentary are you thinking that that's more of a lateral.
Speaker Change: Connections to walk us Ian Athabasca or you think you're more of those those two pipes.
Speaker Change: Pension expanded.
Speaker Change: Yes, Ben Carl here, So generally I would say.
Speaker Change: The basin is over piped I think theres a lot of competitors up there, but there are a number of bottlenecks.
Speaker Change: In the system we have.
Speaker Change: Seven pipelines in the region, you'll recall them and these would be.
Speaker Change: Again, a horsepower DRA.
Speaker Change: Lateral some long haul types in scope, there too but debottlenecking.
Speaker Change: Very capital efficient returns year insurance cycles. So.
That production growth, we talked about earlier is showing up on the mainline in downstream, but also at home locally so it's.
Speaker Change: Yes.
Speaker Change: It's fairly imminent here, we're looking at this in the next few quarters.
Speaker Change: Okay, that's great to hear thank you.
Speaker Change: Yes.
Speaker Change: Our next question comes from the line of Maurice Choy from RBC capital markets. Your line is open.
Maurice Choy: Thank you and good morning, everyone just wanted to stick with the mainline steam here Gregg and Colin you. Both mentioned in November is a portion but may not be a portion every month.
Speaker Change: And then.
Maurice Choy: Maybe if you can look at things on an annual basis can you talk to any factors that would cause you think this year's volume level wouldn't improve in 2025 and beyond.
Maurice Choy: Whether that be expectations like body prices production shut in.
Maurice Choy: Keen to hear your thoughts on that.
Sure.
Yes so.
Last is call it 2020.
Maurice Choy: Threes annual.
Maurice Choy: Volume throughput through the mainline was basically full acres 30 80.
Maurice Choy: All time record.
Maurice Choy: This year, we're trending to.
Over three.
Maurice Choy: Probably not 380, but over three and next year I think you should think about.
Maurice Choy: Comparable number we'll I think we'll have more definition for you in a few weeks but.
Maurice Choy: Lots of factors.
Maurice Choy: But each year, we theres turnarounds embedded in that Theres outages embedded in that.
Maurice Choy: Their supply growth theres demand growth.
Maurice Choy: I think the competitor pipelines are performing well, but but generally at a run rate level.
Maurice Choy: We continue to find and optimize our own capacity are outage management Scott.
A lot better with optimizations that we're doing.
Maurice Choy: Monthly and quarterly to add a little bit of capacity so.
Maurice Choy: We remain pretty bullish on the utilization like the numbers. We're talking about are 90, 899% full so there is some variation around that I don't want to give anybody the impression that it's it's locked but it's.
Maurice Choy: It was a multiplicity of of supply sources, we're connected to.
Maurice Choy: 40 different refineries, so there's a there's a diversity that stabilizes it generally.
Speaker Change: I Love the question Mara because.
Maurice Choy: It's only a couple of years ago, where people were at all are you going to add $3 million in there. We are continuing to do that as you hear from Collyn you know yet.
Yes, $3 million and then let's let's look at other opportunities down the road. So it's a good question because I think a lot of people were dead wrong on this issue and I think we've proven that out.
Different different cycles, but also even the arrival of <unk>.
Speaker Change: Yes, Max ramp up definitely has been much better than anyone and.
Speaker Change: It's got to be honest so that's good.
Speaker Change: May be finishing up on a question on the secured growth plan.
Speaker Change: From the prepared remarks, and even from Michel's comments, there seems to be quite a bit of growth in the U S and possibly even in the <unk> <unk> integrated energy resource planning.
Speaker Change: And we obviously heard from mass use mid teens return commentary just now renewables. So Greg as you look across your various businesses you have today.
Speaker Change: Can you speak to the trends maybe since Enbridge day can you speak to the trends in terms of where you see the greatest opportunity set and separately, where the risk adjusted returns that are most attractive.
Greg Evo: Yeah sure I mean look at Youre, absolutely right I think the arrival of the U S utilities into the portfolio put a new opportunity set and then as Michel said you throw on the datacenter elements of that and really it's the electric.
Speaker Change: Elements of that these things need to be powered.
That allows the incremental opportunities on the renewable side very carefully certain jurisdictions quick cycle, just like GDS. So I see that opportunity there and then let's not forget GTS GTS.
Speaker Change: Filling up on.
Speaker Change: On the power side the storage side.
The LNG facilities as I said in my comments are really our sector trends that we are in front of right now whether it's on the power side, where it's around the reindustrialization side and near shoring or whether it's on the export side, which you heard the numbers in our record numbers on Ingalls side.
Speaker Change: And youre going to see things kick up on the LNG side as well so I would say to your to your base question, we have an opportunity rich environment and everybody has got to compete for that even amongst the utilities, we will invest our capital in the best returning utilities, if Thats, Ontario, Ontario.
Speaker Change: Ohio, Ohio, Utah, and the same thing on the gas side is it going to be BC or is it going to be the Gulf coast or other or the northeast.
Speaker Change: And so.
Speaker Change: So I think we've got we've got the capacity as Pat as laid out in the past that eight or $9 billion.
Speaker Change: Of capacity each year and I expect we will use it and so it comes down to risk adjusted returns. How quick can you take that capital turned into earnings for shareholders, which allows us to continue to drive the dividend forward. So.
Speaker Change: If anything I would just say the market since Investor day, and we look forward to come back to you all in March has got even better.
Speaker Change: Both externally for our growth, but internally for competition for capital I liked that dynamic for growth.
Speaker Change: That's very good to hear thank you very much.
Speaker Change: Our next question comes from the line of Manav Gupta from UBS. Your line is open.
Manav Gupta: Good morning, guys, congrats on a strong quarter.
Manav Gupta: Early October you announced the project, which adds to a growing pipeline in Gulf of Mexico to support <unk> operations can we get some more details about this project and it's a good return on investment.
Speaker Change: Yes, Matt.
Speaker Change: Cynthia Hansen here. Thanks for the question, we're really excited about the canyon pipeline supporting the BP Curse Kita. So as was noted it's about $700 million of investment in.
Speaker Change: And that will begin service in 2029, what we really like is that it ties into our existing infrastructure that we have there.
Speaker Change: May know this you may not that we actually transport, 40% of all the natural gas that comes in the in the Gulf Coast and this.
Speaker Change: Particular shield.
Speaker Change: We have a lot of experience and expertise in this area supporting this infrastructure is going to tie in the gas pipeline that 12 inch is going to tie into our existing field Magnolia gas platform and then the other oil pipeline ties into this challenge destruction of.
Speaker Change: Of course last year, we did announce our projects there to support the ongoing developments for Sparta.
Really does tired and we're getting that long term return with really strong contracts.
Speaker Change: So the contracts allow us to get that return on our investment in that first 10 year period. So it's really exciting for us to continue to support that build out in the Gulf of Mexico.
Speaker Change: Really does also Cynthia.
Speaker Change: Coming into 2009, it's adding to that growth profile beyond our current three or four year look now youre talking about into 2009 and beyond which filling up that hopper.
Speaker Change: As important for us and Thats really adds to that.
Speaker Change: Thank you I'll turn it back.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Rob Hope from Scotiabank. Your line is open.
Speaker Change: Good morning, everyone.
Speaker Change: Wanted to kind of follow up on the filling the hopper comment.
Take a look at that $89 billion of annual investment capacity when you take a look at it over the next couple of years.
Speaker Change: How full are you on that do you have a wealth of opportunities in front of me that you are we'll call it cherry picking the best.
Speaker Change: Best projected and kind of where do you think do you have the most room to kind of backfill. The this apple plants, yes, maybe I'll start and then maybe padawan Ed Yes, I mean, we do have a wealth of opportunities. So it's it goes back to that issue of which theres different elements right. So if I look at our projects.
Speaker Change: In Western Canada, we've got some great projects, there, but theyre a little bit further out when I look at things like GBS, where some of the regional activities that Carlin was just talking about are the projects. We just announced just announced on the solar side Theyre coming in at 25 and 26, So I think we've been able to.
Pick off the ones with the best returns soon as additions to EBITDA, while still being able to look at whether let's face it long haul pipelines take longer to build.
Speaker Change: And those are actually filling up the hopper outside of our numbers. So I think when you look at it but we've we're in a good spot to be able to fund all of that.
As well as the ongoing maintenance capital to keep the keep the business running reliably win with integrity, Yes, I think we've still got a little bit of capacity in the next few years here to do things like Matthew to do some of the stuff Matthew Michelle's groups doing.
Speaker Change: Within the utilities I think for the third quarter is kind of a microcosm of what we should see over the next little while the diversity of the opportunities. We've got the quick turn capital high returning capital coming out of Matthews Green power business. We've got the start of a bunch of real projects within Michelle's, that's helping to serve the data center.
Speaker Change: Increasing electrification and then we've got long term and a decade type of project and Cynthia's business. So I like the fact that its diverse from a spend profile diverse from a.
Speaker Change: When they come into service, helping to extend our growth and reaffirmed the growth over the 2026. So we still got a little bit of capacity in 'twenty five 'twenty six to continue to do stuff on lots in the back part of the decade, So real excited about the opportunities here.
Speaker Change: We're going to try and pick the best of the best as we go forward Rob as you think about it it's probably on our website from last year I think we've got that $8 billion to $9 billion capacity slides, we're utilizing six to seven which leaves US a couple of billion dollars for these opportunities to come along so that's a good one to refresh and take a look at.
Speaker Change: And then maybe to follow up there like as you take a look at the tuck in M&A market.
Speaker Change: <unk> be an opportunity to give you that data that $89 billion.
Speaker Change: And what opportunities are you seeing to be most interesting and the second market.
Definitely it's something we're always watching.
Speaker Change: So we get to see those but they've got a continued against the organic stuff. So when you've got a couple of $1 billion or more a year of opportunities that come up again, whether it's distribution renewables.
Speaker Change: Regional pipes, they're going to have to compete both from an accretion perspective and from a balance sheet perspective right. So.
Speaker Change: I would argue in 2023, we picked up some really great assets, whether it's storage stuff.
Speaker Change: And whether it's the utility work or some of the pieces, we picked up on the renewable side that was a good time to make those moves so we'll be picky going forward because thats helped build up the hopper it really nice multiples relative to what I would suggest you'll see today, which will still be higher multiples as people look at the value of.
These assets in some of those secular changes I talked about really make the value of all of these assets from liquids right through to renewables more valuable than they were a year ago.
Thank you.
Speaker Change: Thanks.
Our next question comes from the line of <unk> Chen from Barclays. Your line is open.
Speaker Change: Hi, Good morning, Thank you for taking my question.
Speaker Change: Would you be able to provide an updated outlook on.
Speaker Change: Bravo pipeline project and given that the <unk> circuit vacated at the FERC authorization with a liquefaction facility in.
Speaker Change: Early August does this change the timeline for the pipeline project and what are your general expectations for next steps and timeline to resolve a legal issue.
Speaker Change: Surgery side Cynthia again.
Speaker Change: We're extremely disappointed by the DC circuit.
Our Rio Bravo section seven.
Speaker Change: Certificate and basically.
That Rio Bravo is now held by the Whistler parent JV. So.
Speaker Change: We are supporting that ongoing work through our <unk>.
Speaker Change: JV partnership.
Speaker Change: It's not unprecedented here through the DC circuit Q.
Speaker Change: Get involved in these kind of permitting processes and the FERC had a strong track record of figuring out how to navigate the space in the past right now, it's not having a material impact on our Enbridge guidance now.
Speaker Change: Our next decade, Matt Weitzman has said that they're going to continue to focus on keeping that project on track.
Speaker Change: Make sure it's on line to be in service in 2007.
Speaker Change: And I think they've recently pulse Rio Bravo and Rio Grande.
Speaker Change: <unk> petition for rehearing.
Speaker Change: To make sure that we can go forward with that and there's been strong industry support so number of amicus brief sweep supported AD industry associations have supported that.
Speaker Change: I think you know, it's really important for us to get that clarity and that regulatory approval process.
Speaker Change: And theres more to come on that but.
Speaker Change: It's something that we're watching and supporting.
Speaker Change: Great. Thank you.
Speaker Change: Further east in the Gulf Coast.
Speaker Change: Would you be able to provide an update on the <unk> extension project servicing the platinum mines facility just given recent concerns of delays for the startup I have to look at the on the liquefaction side can you remind us when do you expect volumes to ramp up more significantly.
Speaker Change: And.
Speaker Change: When do you begin I E will you be paid regardless of ramp up with this.
Speaker Change: Year end 2000 2014 line.
Speaker Change: Yeah. Thanks, <unk>, so all great news.
As of today, we are flowing through our white castle.
Speaker Change: Our facilities so that's the arena.
Speaker Change: One eight Bcf and we think that the other queue, Jason <unk> will be in service by the end of the year and so we're already starting to receive some payments associated with those facilities.
Speaker Change: Thank you.
Speaker Change: And your final question comes from the line of <unk> Satish from Wells Fargo. Your line is open.
Speaker Change: Thanks, Good morning.
Speaker Change: Going back to solar so it seems like interconnect agreements. That's the main driver here for moving forward with quick return quick cycle projects with high returns I guess.
Speaker Change: Can you talk about how much more interconnection capacity you have that could support more of these type of projects and then just to clarify the mid teens return for the solar project that you sanctioned is that for the first year, including the upfront ITC or is that the.
Speaker Change: The IRR over the life of the project.
Yes.
Speaker Change: This is Matthew again, just on your last part first.
Speaker Change: This is actually going to be a PTC project not an ITC. So it's nice because it's kind of more smooth across a multi year period. So it will provide that kind of stable contracted reliable cash flow for many years to come and yes. It will be immediately accretive solidly right out of the chute and then.
Speaker Change: For all the years forward. So that's kind of the overall profile and sure when we talk about returns it's always.
Speaker Change: Life of project.
Speaker Change: In terms of what else we have yes, we've got a great pipeline.
Speaker Change: Some of that was stuff that we have been cultivating for a number of years internally and then.
Speaker Change: Just over two years ago, we acquired <unk> global energy and they had a bunch of stuff that we've got.
Speaker Change: Probably a couple of Gigawatts.
Speaker Change: Up to a couple of Gigawatts of solar with interconnection agreements, we've got great discussions going on with all the data centers as you can imagine and other blue chips on that and then we've got about a gigawatt of wind interconnection ready so.
Speaker Change: Overall, we've got a few gigawatts is still here.
Speaker Change: We can rollout again all of this stuff has to compete on returns as we always said on renewable and we're getting those.
Speaker Change: And as long as it does continue to compete on returns in a low risk contracted model then.
Speaker Change: We look forward to rolling a bunch more of this out in the coming years, Yes, I think we said at Enbridge days that we might spend a $1 billion a year on this this is probably a bigger year than we said like that and that has all to do with the returns. We're seeing the quick turn of that capital and how it competes in the early years here. So I think if Matthew if you continue to bring these types of projects.
Speaker Change: With the return and quick turn that we like we can continue to do more of them.
Speaker Change: Got it that's helpful.
And then you've highlighted throughout the call opportunities with data centers on the LDC side, the renewables business.
Speaker Change: I guess, what are you seeing along Texas eastern and the U S gas pipeline assets in terms of potential discussions with utilities that are building out gas plants or.
Speaker Change: Data centers directly for behind the meter solutions, maybe if you could just give us an update on that.
Speaker Change: Yeah. Thanks Puneet.
Speaker Change: Yeah.
Speaker Change: We've said this before we have 45% of all of the North American power generation, that's within 50 miles of pipeline. So we're really well situated and thats not just for data centers, but that's for other.
Speaker Change: Power demand, we still have coal to gas switching the onshore and industrialization that we're seeing but specifically for that data center focus we're seeing inbound.
Speaker Change: Ross that region, but also recently in the U S southeast.
Speaker Change: That <unk> seven Bcf.
Speaker Change: Per day increased demand has afforded bout four five gigawatts of new gas fired generation. So we're seeing a lot of inbounds. We're working through that I think we continue to be really well positioned to support the data center Buildout paper needs. Just one thing I would just add is that.
Speaker Change: It's not just opportunity is I don't want you to take these are actual things that are being done today I hear a lot about opportunities, which is great. That's built in there, but you know.
Speaker Change: This build out is happening right now this data center.
Speaker Change: Connection in Utah is happening now.
Speaker Change: Fox squirrel with Amazon is happening right now so yes, the opportunity is there, but I think uniquely to us versus some others and that's because of where the assets are the interconnection of the different businesses and how we can offer things that stuffs happening now so it's both current and opportunity going forward.
Got it that's helpful and if I could just sneak one real quick.
Speaker Change: Question in here with the recent flooding in North Carolina with Hurricane Helene.
Speaker Change: Has that had any impact on your <unk> business.
Speaker Change: Well first of all most importantly, it has had a terrible impact on people right and so that's.
Speaker Change: I'm really proud of the team there and how they've stepped up and helped the community, but operationally and financially. If you go there no I mean, yes, we have things to do replacement, but all all the folks are back online now if you need gas we're getting gas there are some homes that were completely.
Speaker Change: Destroy it but those hooked up but thats not a large number but to Asheville is back with terms of gas service from TSMC.
Speaker Change: Got it appreciate it. Thank you those costs with that do come up we'd just go into a deferral account again.
Important element of regulatory structure for utilities right.
Speaker Change: Yep got it thank you.
Speaker Change: Yes.
Speaker Change: And that concludes our question and answer session I will now turn the call back over to Rebecca Morris for closing remarks.
Rebecca Morris: Great. Thank you and we appreciate your ongoing interest in Enbridge as always our Investor Relations team is available following the call for any additional questions that you may have once again, thanks and have a great day.
Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.
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