Enbridge Inc. is readying its oilsands pipelines for startup after shutting down parts of the system as wildfires ripping across northern Alberta forced the evacuation of more than 80,000 people.
Canada’s largest pipeline company has resumed operations at its Cheecham oil terminal and is getting ready to restart its Woodland and Athabasca pipelines, Chief Executive Officer Al Monaco said on a conference call Thursday. Getting Enbridge’s network back up is key for oil-sands developers who are also looking to bring back about 1 million barrels a day of production they pushed offline amid the fire risk.
Enbridge doesn’t expect the fires to affect its 2016 financial results or outlook, the company said while reporting a first-quarter profit.
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“Our preliminary estimate at this point is that it won’t have a material impact on our 2016 outlook,” Monaco said on the call.
Deliveries on the company’s oil-sands lines, which were cut by about 900,000 barrels a day during the fires, will increase as capacity is restored over the next few days, the company said. The speed of restarts depends on factors including re- establishing power supply and its ability to access the facilities.
The company gained limited access to its sites beginning late Sunday. Monaco said there was no damage at its Cheecham and Athabasca terminals and limited damage to some above-ground facilities along its pipelines. There are still power issues to resolve on the Athabasca line, which is scheduled for startup this weekend, Monaco said.
Firefighting efforts are currently preventing Enbridge from doing final assessments of its Woodland Pipeline, which it said is otherwise ready to restart.
Enbridge’s net income in the first quarter was $1.21 billion, or $1.38 a share, compared with a loss of $383 million, or 46 cents, a year earlier, the Calgary-based company said in a statement. Excluding one-time items, the per-share profit of 76 cents exceeded the 64-cent average of 13 analysts’ estimates compiled by Bloomberg. The earnings were driven by record volumes carried on Enbridge’s main oil system, which helped shield it from the collapse in crude prices.
Enbridge continues to expand its crude pipelines even as it looks for ways to reduce its dependence on oil-sands growth as the prolonged price collapse casts doubt over the future of projects in Western Canada. The company is still attempting to win support for the Northern Gateway line to the Pacific Coast. Last week it requested a three-year extension of the period to start construction and increased the indigenous ownership stake.
The financial results beat expectations on “stronger than expected contributions” from its liquids pipeline business, Patrick Kenny, an analyst at National Bank Financial in Calgary, wrote in a note.
Enbridge is seeking to shift its focus after the current wave of projects draws to a close near the end of the decade. The company, which has $18 billion of projects with secured customers through 2019, is also looking at power generation and energy services as areas for growth. This week it spent $282 million for a 50 per cent stake in a French offshore wind company, and in January it bought two natural gas processing plants and associated pipelines in eastern British Columbia from Murphy Oil Corp. for $538 million.
“As we generate a lot of cash in liquids, it makes sense to redeploy that in other areas so we get a better balance,” Monaco said Thursday on the call.
The company completed a $2.3 billion secondary offering in the first quarter, which it said Thursday more than takes care of its equity funding needs through 2017 and will allow it to take advantage of new opportunities to grow and diversify its assets.
While Enbridge’s outperformance versus analysts’ estimates on adjusted earnings should be a “modest positive for the stock,” it’s difficult to immediately interpret the results in the company’s different business units because it changed its reporting structure, Robert Kwan, an analyst at RBC Dominion Securities in Vancouver, wrote in a note.
Enbridge reported the results before the start of trading on North American markets. The shares, which have 13 buy and three hold recommendations from analysts, rose 0.9 per cent to $51.70 at 12:51 p.m. in Toronto.