Analyst Note| Stephen Ellis |
Enbridge’s third-quarter results were strong, given the positive project and M&A announcements, in our view. After updating our model, we are maintaining our Enbridge fair value estimates and narrow moat rating. Enbridge reaffirmed its 2022 EBITDA outlook of a midpoint of CAD 15.3 billion and will update investors with its 2023 outlook later in November. However, with the recent decline in oil, gas, and natural gas liquids pricing, we expect near-term softness due to narrower spreads in the energy services business, so we’ve trimmed our 2023 forecast (but not enough to impact our fair value). Enbridge also noted that when the Trans Mountain pipeline enters service potentially in late 2023, it expects Mainline to take a perhaps 10% hit on utilization, or roughly 300,000 barrels per day, which will take several years to recover from as shipping ramps up volumes.