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Enbridge Inc ENB

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Enbridge Adds Leading Corpus Christi Oil Export Terminal at Fair Price With Moda Buy

Stephen Ellis Sector Strategist

Analyst Note

| Stephen Ellis |

Enbridge has agreed to acquire Moda Midstream for $3 billion in cash in what we think is a fairly priced deal. The crown jewel of the acquisition is Ingleside Energy Center, which loaded 25% of all U.S. Gulf Coast oil exports in 2020. The asset can export 1.5 million barrels per day and has over 15 million barrels of storage. At 8 times forward EBITDA, the price looks fair to us, as it already reflects nearly all of the center’s earnings potential. With an earnings contribution of $375 million, the deal represents only about 3.5% of Enbridge’s expected 2021 EBITDA of just over $10.5 billion. As a result, we consider the deal immaterial to our fair value estimate, and our narrow moat rating is unchanged.

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Company Profile

Business Description

Enbridge owns extensive midstream assets that transport hydrocarbons across the U.S. and Canada. Its pipeline network consists of the Canadian Mainline system, regional oil sands pipelines, and natural gas pipelines. The company also owns and operates a regulated natural gas utility and Canada's largest natural gas distribution company. Finally, the firm has a small renewables portfolio primarily focused on onshore and offshore wind projects.

Contact
425-1st Street SW, Suite 200, Fifth Avenue Place
Calgary, AB, T2P 3L8, Canada
T +1 403 231-3900
Sector Energy
Industry Oil & Gas Midstream
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 11,200

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