Enbridge, Inc. Q3 FY2025 earnings call

• Personnel Changes: Congratulated Cynthia on retirement and Matthew's transition; Allen Capps appointed to succeed Matthew in Corporate Strategy Group and Power business.
• Financial Performance: Record third quarter adjusted EBITDA driven by incremental contributions from U.S. gas utilities and organic growth in gas transmission. Debt-to-EBITDA at 4.8x, within leverage range.
• Project Execution: Sanctioned numerous secured growth projects across segments, including Southern Illinois Connector, Egan and Moss Bluff storage expansions, and Pelican sequestration hub. Advancing mainline optimization projects.
• Value Proposition: Low-risk model with diversified cash flows from over 200 high-quality asset streams, negligible commodity price exposure, and majority EBITDA with inflation protection. Utility-like business model well-positioned with improving policy support for new investment.

Liquids segment

• Third quarter average mainline volumes reached a record 3.1 million barrels per day. Sanctioned the Southern Illinois Connector project with long-term contracts for full path service from Western Canada to Nederland, Texas, adding 100,000 barrels per day of contracted full path capacity. Advancing mainline optimization Phase 1 and 2 to add close to 500,000 barrels per day of capacity. Added the Pelican sequestration hub to the backlog with 25-year take-or-pay offtake agreements.

Gas Transmission segment

• Sanctioned expansions of Egan and Moss Bluff storage facilities to support LNG build-out along U.S. Gulf Coast, with combined 23 Bcf of incremental capacity. Sanctioned a capital-efficient connection to Canyon pipeline system for bp's Tiber development, AGT Enhancement in U.S. Northeast to increase Algonquin pipeline capacity, and Eiger Express pipeline in Permian. Contributed from Venice extension and Permian joint ventures.

Gas Distribution and Storage segment

• Reached positive rate settlements in North Carolina (allowed return on equity increased to 9.65%) and Utah (expecting rate order by end of year). Data center and power generation opportunities driving commercial activity, with over 50 opportunities serving up to 5 Bcf per day of demand, including close to 1 Bcf per day for secured projects.

Renewable Power segment

• Fox Squirrel and Orange Grove operational; Sequoia Solar to enter service in 2026; Clear Fork in 2027. Projects backed by agreements with large technology and data center players like Amazon and Meta. Over 2 gigawatts of power backed by these projects.

• Reaffirmed 2025 EBITDA in the upper half of $19.4 billion to $20 billion range. DCF per share expected at midpoint of $5.50 to $5.90 per share range.
• Dividend grown for 30 consecutive years. $35 billion in secured capital supporting 5% growth through end of the decade.
• Intend to issue '26 guidance for investors in early December.

• Policy Risks: Uncertainties in project permitting and execution due to policy changes.
• Commodity Price Exposure: Though negligible, still a potential risk.
• Competition and Supply Chain: Constraints in certain projects, especially in data center and power generation opportunities with high competition and supply chain issues.

Q: I wanted to start with gas distribution and storage. The release mentioned seeing an acceleration there in commercial activity and it sounds like demand from data centers and power being those initial expectations. So just a multipart question here, but curious what's suddenly driving that acceleration, if there's a particular region where you're seeing it? And how are you thinking about the time frame for when these could start to materialize?

A: Sure. So it's Michele Harradence here, Spiro, and happy to discuss that. And I would say we're seeing it across the board. I mean that's the real value of the diversity of the utilities we have. So -- when we look at about the projects that make up that 7 Bcf or so of data center opportunities that we're talking about, we divide that aspect into what I'd call our baseload demand, our data centers itself and the coal to gas. So it's a lot about power generation. It's the electrification tailwind that we've talked about. So you could bucket that, I would say, the baseload demand is there in Ontario, it's there in Ohio, it's there in Utah, data center growth, lots of early-stage developments in Ohio and Utah in particular. I would say we're seeing up to 8 gigawatts between the two of them. And that's some of the early-stage developments we're seeing. And then the mid-stage stuff, we're estimated to be serving over 6 gigawatts in those two jurisdictions alone. And Ontario has a lot of growth as well. And then finally, coal-to-gas conversion, again, to support power generation would be in North Carolina. But really, when we look across all the capital opportunities we have for GDS, that's maybe 20% of what we're looking at is the data center and power generation opportunity. I mean just the good standard core utility growth, leveraging our modernization program, still lots of opportunity there. We're seeing a lot of what I'd call major projects. We just put our Panhandle regional project into service. That's close to $360 million in Southwest Ontario. We have our Moriah Energy Center, the LNG plant in North Carolina. We have 215 Phase 1 and 2 in North Carolina. That's -- those two combined are USD 1.2 billion alone. We're doing a reinforcement project in Ontario up in Ottawa. That's another $200 million. I mean, there's a lot of growth and opportunity going on in the utilities. And then our residential growth, although it softened in Ontario, continues to be strong in places like North Carolina and Utah, where there's a lot of folks coming. And finally, we're looking at our storage opportunities, and there's a good chunk of our capital that continues to go to storage for us. So a good suite of capital there, but hopefully, that answers your question.

Q: On the Egan and Moss Bluff gas storage expansions, can you break down how much of the 23 Bcf of capacity is already committed under long-term contracts versus any shorter-term contracts or merchant capacity? And then given that you're moving forward with the expansion, I assume pricing is favorable, much higher than historical levels. But can you provide some color on the contract durations? Is it kind of in the typical 3- to 5-year range? Or are you able to get something longer in this environment?

A: Thanks, Praneeth. It's Cynthia. I would say that where we are right now, we have Egan, the first cavern that we're developing there is about 50% contracted and we'll, over a period of time, lag into that. We're managing these assets. It's an existing portfolio. So we're going to manage those contract terms consistently with how we've operated those assets. When we look at the overall contract terms, it is a speed from that 2- to 5-year kind of average overall. We always look for those longer terms as to be part of that portfolio. But as you noted, just with the opportunities right now as we continue to see the demand for storage increase, and we've seen some strong pricing associated with that, that's really supporting this ongoing development that we're doing. We want to try and manage the portfolio to really optimize that structure as we go forward.