Enbridge Completes Acquisition of The East Ohio Gas Company

Rhea-AI Summary

Enbridge Inc. completes the acquisition of The East Ohio Gas Company from Dominion Energy, Inc., adding a premier gas utility serving over 1.2 million customers in Ohio. The acquisition enhances Enbridge's Gas Distribution and Storage Business Unit, diversifying its business and strengthening its cash flow profile. The company expresses optimism about the strategic fit and long-term benefits of the acquisition.

Insights

Financial Analyst

The acquisition of The East Ohio Gas Company (EOG) by Enbridge Inc. represents a significant strategic expansion within the energy sector. From a financial perspective, the addition of EOG to Enbridge's portfolio is poised to enhance the company's cash flow stability due to the regulated nature of the utility business. EOG's established customer base of over 1.2 million, coupled with its extensive pipeline and storage infrastructure, offers a reliable revenue stream. This acquisition is particularly noteworthy as it is expected to contribute over 40% of the total annualized EBITDA from the planned utility purchases from Dominion Energy, Inc. Such a contribution is substantial and could lead to a re-evaluation of Enbridge's financial health and creditworthiness by investors and rating agencies.

Moreover, the strategic positioning in Ohio, with its major metropolitan areas, could open additional value-add opportunities for Enbridge's other business units. It's important to monitor the post-acquisition integration process as it can affect the anticipated synergies and cost savings. The market will also pay close attention to how this acquisition will blend with Enbridge's long-term dividend profile, as the company has indicated a positive outlook through the end of the decade.

Market Research Analyst

Enbridge Inc.'s acquisition of EOG marks a pivotal move in the North American energy market, particularly within the gas distribution sector. The utility market is characterized by stable demand and is less susceptible to the volatile price fluctuations seen in other energy sectors. This stability is a key driver for Enbridge's business model, which focuses on predictable cash flows. The presence of EOG in over 400 communities, including key Ohio metropolitan areas, not only broadens Enbridge's market reach but also enhances its competitive positioning.

From a market perspective, this acquisition could signal a consolidation trend within the industry, as larger players like Enbridge seek to diversify and secure their market share through strategic purchases. Stakeholders should consider the potential for operational efficiencies and the ability of Enbridge to leverage EOG's existing infrastructure to optimize service delivery and expand into new markets.

Energy Sector Analyst

The energy sector is undergoing significant changes, with a focus on infrastructure and long-term asset utilization. Enbridge's acquisition of EOG aligns with the industry's shift towards natural gas, which is seen as a bridge fuel in the transition to cleaner energy sources. The mention of EOG's 'must-have' infrastructure highlights the strategic importance of such assets in the current energy landscape.

Enbridge's emphasis on regulated investments, like natural gas utilities, suggests a strategic hedging against the regulatory risks associated with unregulated energy markets. The integration of EOG into Enbridge's Gas Distribution and Storage Business Unit is expected to strengthen the company's position in the sector and provide a more diversified energy portfolio. The long useful lives of these assets are crucial for Enbridge's long-term planning and are likely to be well-received by investors looking for stability in the face of energy market transitions.

CALGARY, AB, March 7, 2024 /PRNewswire/ - Enbridge Inc. (TSX: ENB) (NYSE: ENB) ("Enbridge" or the "Company") announced today the closing of its acquisition of The East Ohio Gas Company ("EOG") from Dominion Energy, Inc. The gas utility will be doing business as Enbridge Gas Ohio and will join Enbridge's Gas Distribution and Storage Business Unit.

EOG is a premier single-state utility, serving over 1.2 million customers across more than 400 communities in Ohio, with key locations in major metropolitan areas. The gas utility has a robust portfolio of assets, including over 22,000 miles (over 35,400 km) of transmission, gathering and distribution pipelines, underground storage, and interconnections to multiple interstate pipelines and large natural gas producers.

"The addition of a strong Ohio-based gas utility company is a great strategic fit for Enbridge. It further diversifies our business and enhances the stable cash flow profile of our assets," said Michele Harradence, Enbridge Executive Vice President and President, Gas Distribution and Storage. "Natural gas utilities have long useful lives and are 'must-have' infrastructure for providing safe, reliable, and affordable energy. This gas utility will help blend and extend our cash flow growth outlook through the end of the decade by adding a steady, regulated investment that supports our long-term dividend profile. With this acquisition, Enbridge has all four of its business units represented in Ohio, providing further value-add opportunities. We welcome EOG and its employees into the Enbridge family of companies and look forward to building long-term productive relationships with all stakeholders in Ohio and continuing to offer Ohio customers the same safe, reliable service they are accustomed to."

The closings of the purchases of Questar Gas Company and its related Wexpro companies (collectively, "Questar"), and the Public Service Company of North Carolina, Incorporated ("PSNC"), respectively, are expected to occur following the receipt of required regulatory approvals applicable to each gas utility and are not cross-conditioned. The acquisitions of Questar and PSNC are on track to close in 2024. EOG is expected to contribute more than 40% of the total annualized EBITDA from the three gas utilities Enbridge has agreed to acquire from Dominion.

About Enbridge Inc.
At Enbridge, we safely connect millions of people to the energy they rely on every day, fueling quality of life through our North American natural gas, oil, and renewable power networks and our growing European offshore wind portfolio. We are investing in modern energy delivery infrastructure to sustain access to secure, affordable energy and building on more than a century of operating conventional energy infrastructure and two decades of experience in renewable power. We are advancing new technologies, including hydrogen, renewable natural gas, carbon capture, and storage, and are committed to achieving net zero greenhouse gas emissions by 2050. Headquartered in Calgary, Alberta, Enbridge's common shares trade under the symbol ENB on the Toronto (TSX) and New York (NYSE) stock exchanges. To learn more, visit us at enbridge.com.

Forward-Looking Statements

Forward-looking statements have been included in this news release to provide readers with information about Enbridge and its subsidiaries and affiliates, including management's assessment of Enbridge's and its subsidiaries' future plans and operations. This information may not be appropriate for other purposes. Forward-looking statements are typically identified by words such as ''anticipate'', ''expect'', ''project'', ''estimate'', ''forecast'', ''plan'', ''intend'', ''target'', ''believe'', "likely", and similar words suggesting future outcomes or statements regarding an outlook. Forward-looking information or statements included or incorporated by reference in this news release include, but are not limited to, statements with respect to Enbridge's acquisition of three gas utilities, including EOG, from Dominion Energy, Inc. (the "Acquisitions"), including the characteristics, expected closing dates, value drivers, annualized EBITDA contribution and anticipated benefits thereof, on a standalone and combined post-Acquisitions basis; cash flow profile and outlook; and long term dividend profile.

Although Enbridge believes these forward-looking statements are reasonable based on the information available on the date such statements are made and processes used to prepare the information, such statements are not guarantees of future performance and readers are cautioned against placing undue reliance on forward-looking statements. By their nature, these statements involve a variety of assumptions, known and unknown risks and uncertainties and other factors, which may cause actual results, levels of activity, and achievements to differ materially from those expressed or implied by such statements. Material assumptions include assumptions about the following: our ability to complete the Acquisitions and successfully integrate the gas utilities without material delay, material change in terms, higher than anticipated costs or difficulty, or loss, of key personnel; the expected supply of, demand for, export of, and prices of crude oil, natural gas, natural gas liquids ("NGL"), liquefied natural gas ("LNG"), and renewable energy; energy transition and lower carbon energy and our approach thereto; global economic growth and trade; anticipated utilization of our assets; exchange rates; inflation; interest rates; availability and price of labor and construction materials; the stability of our supply chain; operational reliability and performance; customer, regulatory, and stakeholder support and approvals, including, with respect to the Acquisitions; anticipated construction and in-service dates; weather; announced and potential acquisitions, dispositions, and other corporate transactions and projects, and the timing and terms, and the impact thereof, including the Acquisitions; the realization of anticipated benefits of transactions, including the Acquisitions; governmental legislation; litigation; impact of the Company's dividend policy on its future cash flows; Enbridge's credit ratings; hedging programs; expected EBITDA and expected Adjusted EBITDA; expected earnings/(loss) and adjusted earnings/(loss); expected earnings/(loss) or adjusted earnings/(loss) per share; expected future cash flows and expected future distributable cash flow ("DCF") and DCF per share; estimated future dividends; financial strength and flexibility; sources of liquidity and sufficiency of financial resources; debt and equity market conditions; general economic and competitive conditions; ability of management to execute key priorities, including with respect to the Acquisitions; and the effectiveness of various actions resulting from the Company's strategic priorities. Assumptions regarding the expected supply of, and demand for, crude oil, natural gas, NGL, LNG, and renewable energy, and the prices of these commodities, are material to and underlie all forward-looking statements, as they may impact current and future levels of demand for Enbridge's services. Similarly, exchange rates, inflation, and interest rates impact the economies and business environments in which Enbridge operates and may impact levels of demand for Enbridge's services and cost of inputs and are therefore inherent in all forward-looking statements. Due to the interdependencies and correlation of these macroeconomic factors, the impact of any one assumption on a forward-looking statement cannot be determined with certainty, particularly with respect to expected EBITDA, expected Adjusted EBITDA, expected earnings/(loss), expected adjusted earnings/(loss), expected DCF and associated per share amounts, and estimated future dividends. 

Enbridge's forward-looking statements are subject to risks and uncertainties pertaining to the realization of anticipated benefits and synergies of projects and transactions, including the Acquisitions, successful execution of our strategic priorities, operating performance, Enbridge's dividend policy, regulatory parameters, litigation, acquisitions and dispositions and other transactions, including the Acquisitions, and the realization of anticipated benefits therefrom; operational dependence on third parties; project approval and support, renewals of rights-of-way, weather, economic and competitive conditions, global geopolitical conditions, political decisions, public opinion, changes in tax laws and tax rates, exchange rates, interest rates, inflation, commodity prices, and supply of, and demand for, commodities and other alternative energy, including, but not limited to, those risks and uncertainties discussed in this and in the Company's other filings with Canadian and U.S. securities regulators. The impact of any one assumption, risk, uncertainty, or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent and Enbridge's future course of action depends on management's assessment of all information available at the relevant time. 

Except to the extent required by applicable law, Enbridge assumes no obligation to publicly update or revise any forward-looking statements made in this news release or otherwise, whether as a result of new information, future events, or otherwise. All forward-looking statements, whether written or oral, attributable to Enbridge or persons acting on Enbridge's behalf, are expressly qualified in their entirety by these cautionary statements.

FOR FURTHER INFORMATION PLEASE CONTACT:

Media Toll Free: (888) 992-0997 Email: media@enbridge.com

Investment Community Rebecca Morley Toll Free: (800) 481-2804 Email: investor.relations@enbridge.com

 

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SOURCE Enbridge Inc.

FAQ

What company did Enbridge acquire recently?

Enbridge Inc. acquired The East Ohio Gas Company from Dominion Energy, Inc.

How many customers does The East Ohio Gas Company serve?

The East Ohio Gas Company serves over 1.2 million customers across more than 400 communities in Ohio.

What is the expected contribution of EOG to Enbridge's total annualized EBITDA?

EOG is expected to contribute more than 40% of the total annualized EBITDA from the three gas utilities Enbridge has agreed to acquire from Dominion.

What are the key locations served by The East Ohio Gas Company?

The East Ohio Gas Company has key locations in major metropolitan areas in Ohio.

Who is the Executive Vice President and President of Gas Distribution and Storage at Enbridge?

Michele Harradence is the Enbridge Executive Vice President and President of Gas Distribution and Storage.