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Enbridge
Energy Partners, L.P. (NYSE: EEP) ("Enbridge Partners" or "the
Partnership") today declared a cash distribution of $0.5325 per unit
payable August 12, 2011 to unitholders of record on
August 5, 2011.
"We
continue to make excellent progress on our growth initiatives and are pleased
to announce a 3.6% distribution increase, which is in line with our annual
distribution growth target rate of 2 to 5 percent. The increase reflects the
consistent performance of the Partnership and the strong fundamentals we see
for both the Liquids and Natural gas businesses going forward," said
Mark Maki, president of the Partnership's management company.
"These
strong fundamentals are playing out as evidenced by our slate of growth
projects. We continue to work on our organic growth projects both in our
Liquids and Natural gas segments. With respect to our natural gas strategy,
the Granite Wash and Haynesville regions remain areas of significant focus.
Organic growth opportunities in these regions, along with growth in our
liquids segment, give us confidence in our ability to continue to achieve our
annual distribution growth target. On our Liquids segment, we added 25,000
barrels of capacity per day to our North Dakota system and started
construction of an additional 120,000 barrels per day which are expected to
be in service by early 2013," added Maki.
The
Partnership's key financial results for the second quarter of 2011, compared
to the same period in 2010, were as follows:
Three months ended Six months ended
June 30,
June 30,
------------------------------- -------------------- --------------------
(unaudited, dollars in
millions
except per unit amounts)
2011 2010
2011 2010
------------------------------- --------- --------- --------- ---------
Net income
$ 156.9 $ 140.0 $ 274.0 $ 255.4
Net income per
unit**
0.51 0.51
0.90 0.93
------------------------------- --------- --------- --------- ---------
Adjusted EBITDA*
290.6
284.2
574.3
526.3
Adjusted net
income
107.7
120.1
206.7
222.6
Adjusted net income
per unit**
0.32
0.43 0.64 0.80
------------------------------- --------- --------- --------- ---------
* Includes non-controlling
interest
** Adjusted for the 2-for-1 unit
split effective April 21, 2011
Adjusted
net income for the three and six month periods ended June 30, 2011, reported
above, eliminates the impact from: (a) cash settlements from historical
measurement recoveries; (b) additional environmental costs net of insurance
recoveries associated with the incidents on lines 6A and 6B; and (c)
non-cash, mark-to-market net gains; among other adjustments. Refer to the
Non-GAAP Reconciliations table on page 5 for additional details. Adjusted net
income per unit for the second quarter of 2011 is down from the same period
last year primarily due to additional interest expense and a greater number
of units outstanding, both of which are attributable to projects under
construction to expand our natural gas and liquids systems.
COMPARATIVE
EARNINGS STATEMENT
Three
months ended
Six months ended
June 30,
June 30,
------------------------------- -------------------- --------------------
(unaudited, dollars in
millions
except per unit amounts) 2011
2010 2011 2010
------------------------------- --------- --------- --------- ---------
Operating revenue
$ 2,372.0 $ 1,747.4 $ 4,660.9 $ 3,678.6
Operating expenses:
Cost of natural gas
1,861.3
1,270.4
3,690.8
2,794.6
Environmental costs, net of
recoveries
23.3
(0.1)
(11.3) 4.5
Oil measurement adjustments
(54.1) 1.1 (58.7)
-
Operating and administrative 167.6 135.3 334.7 267.8
Power
33.9
36.5
69.5 68.8
Depreciation and amortization
89.6 77.6 178.0 145.5
------------------------------- --------- --------- --------- ---------
Operating income
250.4
226.6
457.9
397.4
Interest expense
78.5
69.6
157.9
128.9
Other income
(loss)
-
(0.1) 6.0 16.7
------------------------------- --------- --------- --------- ---------
Income before income
tax
expense
171.9
156.9
306.0
285.2
Income tax
expense
0.9
2.4
3.2
4.6
------------------------------- --------- --------- --------- ---------
Net income
171.0
154.5
302.8
280.6
Less: Net income
attributable
to noncontrolling
interest
14.1
14.5
28.8 25.2
------------------------------- --------- --------- --------- ---------
Net income
attributable to
general and limited partner
ownership interests in
Enbridge Energy Partners, L.P. $ 156.9 $ 140.0 $ 274.0 $ 255.4
Less: Allocations to
General
Partner
26.6
19.7
47.0 35.9
------------------------------- --------- --------- --------- ---------
Net income allocable
to Limited
Partners
$ 130.3 $ 120.3 $ 227.0 $ 219.5
Weighted average
Limited
Partner units (millions)(1)
255.2
236.5
254.0
236.2
------------------------------- --------- --------- --------- ---------
Net income per Limited
Partner
unit (dollars)(1)
$ 0.51 $ 0.51 $ 0.90 $ 0.93
------------------------------- --------- --------- --------- ---------
(1) Adjusted for the 2-for-1 unit split
issued April 21, 2011
COMPARISON
OF QUARTERLY RESULTS
Following
are explanations for significant changes in the Partnership's financial
results, comparing the three month period ended June 30, 2011 with the same
period of 2010. The comparison refers to adjusted operating income, which
excludes the effect of non-cash and nonrecurring items (see Non-GAAP Reconciliations
section below).
Three months ended Six months ended
Adjusted Operating Income
June 30,
June 30,
------------------------------- -------------------- --------------------
(unaudited, dollars in
millions)
2011
2010
2011 2010
------------------------------- --------- --------- --------- ---------
Liquids
$ 146.1 $ 167.8 $ 295.8 $ 292.9
Natural Gas
56.3
38.8
97.4 65.2
Marketing
(0.5) 1.3
2.5
7.2
Corporate
(0.9)
(1.2)
(2.0)
(1.2)
------------------------------- --------- --------- --------- ---------
Adjusted operating
income
$ 201.0 $ 206.7 $ 393.7 $ 364.1
------------------------------- --------- --------- --------- ---------
Liquids
-- For the three month period ended June 30, 2011 adjusted operating income
for the Liquids segment decreased to $146.1 million from $167.8 million for
the comparable period in 2010. The decrease of $21.7 million in adjusted
operating income was partially driven by lower average daily volumes delivered
from our Lakehead system resulting from temporary
upstream production facility problems in the second quarter of 2011 and
additional transportation takeaway available to our shippers on competing
pipelines. Further impacting the Liquid segment's adjusted operating income
were transportation rate decreases on all of our major liquids systems that
became effective in July 2010. We decreased the indexed component of our
rates for transportation by 1.3 percent on our Liquids systems in compliance
with the indexed ceiling allowed by FERC. The indexed transportation rates
will be increased by 6.9 percent as of July 2011 in connection with the
annual index rate ceiling adjustment. As previously disclosed, the $175
million and $286 million costs for the pipeline integrity programs on Line 6B
will be recovered through the Facilities Surcharge Mechanism that is part of
the system-wide rates of the Lakehead system.
Three months ended Six months ended
Liquids Systems Deliveries
June 30,
June 30,
------------------------------- -------------------- --------------------
(thousand barrels per
day)
2011
2010
2011 2010
------------------------------- --------- --------- --------- ---------
Lakehead
1,601
1,742
1,672
1,683
Mid-Continent
224
204
221
205
North Dakota
184
167
180
163
------------------------------- --------- --------- --------- ---------
Total
2,009
2,113
2,073
2,051
------------------------------- --------- --------- --------- ---------
Natural
Gas -- Quarterly adjusted operating income for the Natural Gas segment was
$56.3 million for the three month period ended June 30, 2011, an increase of
$17.5 million from the $38.8 million of adjusted operating income for the
same period in 2010. The increase in adjusted operating income was primarily
due to increased natural gas and NGL volumes and related increase in fees on
both our Anadarko and East Texas systems. Our Anadarko system benefited from
both the growth in the Granite Wash play and additional volumes associated
with our September 2010 acquisition of the Elk City system. Our East Texas
system benefited from new assets placed in service to capture the growing
natural gas production from the Haynesville shale play.
Three months ended Six months ended
Natural Gas
Throughput
June 30,
June 30,
------------------------------- -------------------- --------------------
(MMBtu
per day)
2011 2010
2011 2010
------------------------------- --------- --------- --------- ---------
East Texas
1,392,000 1,172,000 1,354,000 1,183,000
Anadarko (1)
1,054,000
613,000
992,000
580,000
North Texas
348,000 359,000 343,000 353,000
------------------------------- --------- --------- --------- ---------
Total
2,794,000 2,144,000 2,689,000 2,116,000
------------------------------- --------- --------- --------- ---------
(1) Average daily volumes for the three
and six month periods ended June
30, 2011 include
267,000 MMBtu per day and 242,000 MMBtu per day,
respectively, of
volumes associated with our acquisition of the Elk
City system.
Marketing
-- The Marketing segment reported an adjusted operating loss of $0.5 million
for the three month period ended June 30, 2011, a decrease of $1.8 million
from the $1.3 million of adjusted operating income for the same period of
2010. The decrease is largely attributable to narrower natural gas price
differentials between market centers.
Partnership
Financing -- During the three month period ended June 30, 2011, the
Partnership issued 333,794 Class A Common Units at sales prices averaging
$30.30 for net proceeds of approximately $10.1 million under the terms of its
equity distribution agreement, which allows the Partnership to issue and sell
from time to time up to an aggregate of $500 million of its Class A common
units.
On
July 1, 2010, the Partnership closed on the public offering and sale of up to 8.05 million Class A Common Units at a price to the
public of $30 per unit. Proceeds, net of underwriting commissions and
offering costs, were approximately $233.7 million, which were used to repay a
portion of our outstanding commercial paper.
ENBRIDGE
ENERGY MANAGEMENT DISTRIBUTION
Enbridge
Energy Management, L.L.C. (NYSE: EEQ) declared a distribution of $0.5325 per
share payable August 12, 2011 to shareholders of record on August 5, 2011.
The distribution will be paid in the form of additional shares of Enbridge
Energy Management valued at the average closing price of the shares for the
10 trading days prior to the ex-dividend date on August 3, 2011.
MANAGEMENT
REVIEW OF QUARTERLY RESULTS
Enbridge
Partners will review its quarterly financial results and business outlook in
an Internet presentation, commencing at 9 a.m. Eastern Time on July 29, 2011.
Interested parties may watch the live webcast at the link provided below. A
replay will be available shortly afterward. Presentation slides and condensed
unaudited financial statements will also be available at the link below.
EEP
Earnings Release: www.enbridgepartners.com/Q
Alternative
Webcast link:
http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=63707&eventID=4111410
The
audio portion of the presentation will be accessible by telephone at (866)
277-1181 (Passcode: 36743845) and
can be replayed until October 28, 2011 by calling (888)
286-8010 (Passcode: 32944032). An
audio replay will also be available for download in MP3 format from either of
the website addresses above.
NON-GAAP
RECONCILIATIONS
Adjusted
net income and adjusted operating income for the principal business segments
are provided to illustrate trends in income excluding derivative fair value
losses and gains and other nonrecurring items that affect earnings. The
derivative non-cash losses and gains result from marking to market certain
financial derivatives used by the Partnership for hedging purposes that do
not qualify for hedge accounting treatment in accordance with the
authoritative accounting guidance as prescribed under generally accepted
accounting principles in the United States.
Three months ended Six months ended
Adjusted
Earnings
June 30,
June 30,
------------------------------- -------------------- --------------------
(unaudited, dollars in
millions
except per unit amounts)
2011 2010
2011 2010
------------------------------- --------- --------- --------- ---------
Net income
$ 171.0 $ 154.5 $ 302.8 $ 280.6
Lines 6A and 6B
incident
expenses, net of recoveries
23.0
-
(12.0)
-
Lawsuit
settlement
-
-
(9.0)
-
Oil measurement
adjustments
(52.2)
- (52.2)
-
Impact from unusual
winter
conditions
-
-
9.2
-
Expired joint tariff
revenues
-
(2.1)
-
(6.9)
Noncash derivative
fair value
(gains) losses
-Liquids
(9.4)
(1.6)
(4.8)
(0.4)
-Natural Gas
(9.6)
(20.1)
(0.5)
(30.3)
-Marketing
(1.2) 3.9
1.7
4.3
-Corporate
0.2
-
0.3
0.5
Net income
attributable to
noncontrolling
interest
(14.1)
(14.5)
(28.8)
(25.2)
------------------------------- --------- --------- --------- ---------
Adjusted net
income
107.7 120.1 206.7 222.6
Less: Allocations to
General
Partner
25.6
19.3
45.7 35.2
------------------------------- --------- --------- --------- ---------
Adjusted net income
allocable
to Limited Partners
82.1
100.8
161.0
187.4
Weighted average units
(millions)(1)
255.2
236.5
254.0
236.2
------------------------------- --------- --------- --------- ---------
Adjusted net income
per Limited
Partner unit (dollars)(1) $ 0.32 $ 0.43 $ 0.64 $
0.80
------------------------------- --------- --------- --------- ---------
(1) Adjusted for the 2-for-1 unit split
effective April 21, 2011
Three
months ended
Six months ended
Liquids
June 30,
June 30,
------------------------------- -------------------- --------------------
(unaudited, dollars in
millions)
2011
2010
2011 2010
------------------------------- --------- --------- --------- ---------
Operating income
$ 184.7 $ 171.5 $ 370.4 $ 300.2
Lines 6A and 6B
incident
expenses, net of recoveries
23.0
-
(12.0)
-
Lawsuit
settlement
-
-
(5.6)
-
Oil measurement
adjustments
(52.2)
-
(52.2)
-
Expired joint tariff
revenues
-
(2.1) - (6.9)
Noncash derivative
fair value
gains
(9.4)
(1.6)
(4.8)
(0.4)
------------------------------- --------- --------- --------- ---------
Adjusted operating
income
$ 146.1 $ 167.8 $ 295.8 $ 292.9
------------------------------- --------- --------- --------- ---------
Three months ended Six months ended
Natural Gas
June 30,
June 30,
------------------------------- -------------------- --------------------
(unaudited, dollars in
millions)
2011
2010
2011 2010
------------------------------- --------- --------- --------- ---------
Operating income
$ 65.9 $ 58.9 $ 88.7 $
95.5
Impact from unusual
winter
conditions
-
-
9.2
-
Noncash derivative
fair value
gains
(9.6)
(20.1)
(0.5)
(30.3)
------------------------------- --------- --------- --------- ---------
Adjusted operating
income
$ 56.3 $
38.8 $ 97.4 $ 65.2
------------------------------- --------- --------- --------- ---------
Three
months ended
Six months ended
Marketing
June 30,
June 30,
------------------------------- -------------------- --------------------
(unaudited, dollars in
millions)
2011
2010
2011 2010
------------------------------- --------- --------- --------- ---------
Operating income
(loss)
$
0.7 $ (2.6) $ 0.8 $ 2.9
Noncash derivative
fair value
losses (gains) (1.2) 3.9
1.7
4.3
------------------------------- --------- --------- --------- ---------
Adjusted operating
income
(loss)
$ (0.5) $ 1.3 $ 2.5 $ 7.2
------------------------------- --------- --------- --------- ---------
Adjusted
EBITDA (earnings before interest, taxes, depreciation and amortization) is
used as a supplemental financial measurement to assess liquidity and the
ability to generate cash sufficient to pay interest costs and make cash
distributions to unitholders. The following
reconciliation of net cash provided by operating activities to adjusted
EBITDA is provided because EBITDA is not a financial measure recognized under
generally accepted accounting principles.
Three months ended Six months ended
Adjusted EBITDA
June 30,
June 30,
------------------------------- -------------------- --------------------
(unaudited, dollars in
millions)
2011
2010
2011 2010
------------------------------- --------- --------- --------- ---------
Net cash provided by
operating
activities
$ 200.9 $ 156.8 $ 461.0 $ 365.4
Expired joint tariff
revenues
-
(2.1)
-
(6.9)
Changes in operating
assets and
liabilities, net of cash
acquired
59.9
63.3
(4.5)
20.2
Interest expense*
78.3
69.6 157.6 128.4
Income tax
expense
0.9
2.4
3.2
4.6
Settlement of interest
rate
swaps/treasury locks
-
-
-
13.2
Environmental
Liabilities, net
of accrued insurance
recoveries**
(35.4)
-
(36.0)
-
Impact from unusual
winter
conditions
-
-
9.2
-
Lawsuit
settlement
-
-
(9.0) -
Other
(14.0)
(5.8)
(7.2) 1.4
------------------------------- --------- --------- --------- ---------
Adjusted EBITDA
$ 290.6 $ 284.2 $ 574.3 $
526.3
------------------------------- --------- --------- --------- ---------
* Interest expense excludes
unrealized mark-to-market net losses of $0.2
million and $0.3
million for the three and six month periods ended June
30, 2011,
respectively. Included in interest expense for the six month
period ended June
30, 2010 is unrealized mark-to-market net losses of
$0.5 million.
** Excludes $15 million of
insurance recoveries accrued at June 30, 2011,
to
be received in the third quarter 2011.
LEGAL
NOTICE
This
news release includes forward-looking statements and projections, which are
statements that do not relate strictly to historical or current facts. These
statements frequently use the following words, variations thereon or
comparable terminology: "anticipate," "believe,"
"continue," "estimate," "expect,"
"forecast," "intend," "may," "plan,"
"position," "projection," "strategy" or "will."
Forward-looking statements involve risks, uncertainties and assumptions and
are not guarantees of performance. Future actions, conditions or events and
future results of operations may differ materially from those expressed in
these forward-looking statements. Many of the factors that will determine
these results are beyond Enbridge Partners' ability to control or predict.
Specific factors that could cause actual results to differ from those in the
forward-looking statements include: (1) changes in the demand for or the
supply of, forecast data for, and price trends related to crude oil, liquid
petroleum, natural gas and NGLs, including the rate of development of the
Alberta Oil Sands; (2) Enbridge Partners' ability to successfully complete
and finance expansion projects; (3) the effects of competition, in
particular, by other pipeline systems; (4) shut-downs or cutbacks at
facilities of Enbridge Partners or refineries, petrochemical plants,
utilities or other businesses for which Enbridge Partners transports products
or to whom Enbridge Partners sells products; (5) hazards and operating risks
that may not be covered fully by insurance; (6) changes in or challenges to
Enbridge Partners' tariff rates; (7) changes in laws or regulations to which
Enbridge Partners is subject, including compliance with environmental and
operational safety regulations that may increase costs of system integrity
testing and maintenance.
Reference
should also be made to Enbridge Partners' filings with the U.S. Securities
and Exchange Commission; including its Annual Report on Form 10-K for the
most recently completed fiscal year and its subsequently filed Quarterly
Reports on Form 10-Q, for additional factors that may affect results. These
filings are available to the public over the Internet at the SEC's web site
(www.sec.gov) and at the Partnership's web site.
About
Enbridge Energy Partners, L.P.
Enbridge
Energy Partners, L.P. (www.enbridgepartners.com) owns and operates a
diversified portfolio of crude oil and natural gas transportation systems in
the United States. Its principal crude oil system is the largest transporter
of growing oil production from western Canada. The system's deliveries to
refining centers and connected carriers in the United States account for
approximately 12 percent of total U.S. oil imports; while deliveries to
Ontario, Canada satisfy approximately 60 percent of refinery demand in that
region. The Partnership's natural gas gathering, treating, processing and
transmission assets, which are principally located onshore in the active U.S.
Mid-Continent and Gulf Coast area, deliver approximately 2.5 billion cubic
feet of natural gas daily.
Enbridge
Energy Management, L.L.C. (www.enbridgemanagement.com) manages the business
and affairs of the Partnership and its sole asset is an approximate 14
percent interest in the Partnership. Enbridge Energy Company, Inc., an
indirect wholly owned subsidiary of Enbridge Inc. of Calgary, Alberta, (NYSE:
ENB) (TSX: ENB) (www.enbridge.com) is the general partner and holds an
approximate 25 percent interest in the Partnership.
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