Pipeline operator Enbridge (NYSE:ENB) outperformed third-quarter profit forecasts on Friday, thanks to increased oil and other liquids transportation. The surge in demand for oil, driven by low U.S. inventory levels and buyers seeking alternatives to Russian oil since the Ukraine conflict began last year, has kept pipelines busy and boosted profits for oil and gas transportation companies.
Enbridge, based in Calgary, Alberta, is responsible for moving approximately 30% of the crude oil produced in North America and nearly 20% of the natural gas consumed in the U.S. The company's CEO, Gregory Ebel, stated that they continue to see record usage across their system, including the Mainline. The Mainline system carries light and heavy crude oil, natural gas liquids, and refined products from Edmonton, Alberta to various markets in Canada and the U.S. Midwest.
The company reported a 15.5% increase in quarterly core profit from its liquids pipelines, rising to C$2.25 billion ($1.64 billion) from the same period a year earlier. This upswing was aided by a more than 1% increase in Mainline volumes to 3 million barrels per day.
In premarket trading, U.S.-listed shares of Enbridge saw a 1.5% rise. The company is also making significant investments in U.S. gas. In September, Enbridge announced a $14 billion bid for three utility assets of Dominion Energy (NYSE:NYSE:D), with the aim of creating North America's largest gas utility platform. This deal is anticipated to be finalized in 2024.
CEO Ebel expressed confidence that these acquisitions would bolster the company's ongoing dividend growth profile and provide robust total shareholder returns. Enbridge reaffirmed its annual financial outlook for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of C$15.9 billion to C$16.5 billion, and distributable cash flow of C$5.25 to $5.65 per share.
Enbridge reported an adjusted profit of 62 Canadian cents per share for the quarter ending on September 30, surpassing the average estimate of 60 Canadian cents per share, according to LSEG data.
InvestingPro Insights
Enbridge's solid performance in the market is reflected in its InvestingPro Data. The company has a substantial market cap of $71.18 billion and a P/E ratio of 24.65, indicating its profitability and investor confidence. In the last twelve months as of Q2 2023, Enbridge's revenue was a significant $35859.38 million, despite a decrease in revenue growth of -9.17%.
InvestingPro Tips reveal that Enbridge has a history of rewarding its shareholders, having raised its dividend for 21 consecutive years. The company's commitment to dividend payments, coupled with its position as a prominent player in the Oil, Gas & Consumable Fuels industry, makes it a compelling choice for investors seeking stability and steady returns.
However, it's worth noting that the company's short-term obligations exceed its liquid assets, and there has been a declining trend in earnings per share. This underscores the importance of keeping abreast of financial metrics and expert advice, such as the numerous additional tips available in the InvestingPro platform.
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