Enbridge Energy Partners Declares Distribution and Reports

Enbridge Energy Partners Declares Distribution and Reports Earnings
for Third Quarter 2012 
HOUSTON, TX -- (Marketwire) -- 10/31/12 --  Enbridge Energy Partners,
L.P. (NYSE: EEP) ("Enbridge Partners" or "the Partnership") today
declared a cash distribution of $0.5435 per unit payable November 14,
2012 to unitholders of record on November 7, 2012.  
The Partnership's key financial results for the third quarter of
2012, compared to the same period in 2011, were as follows: 


 
                                                                            
                                      Three months ended  Nine months ended 
                                        September 30,       September 30,   
                                     ------------------- -------------------
(unaudited, dollars in millions                                             
 except per unit amounts)               2012      2011      2012      2011  
                                     --------- --------- --------- ---------
Net income                           $   215.2 $   122.6 $   438.8 $   396.6
Net income per unit                       0.60      0.36      1.21      1.26
                                     --------- --------- --------- ---------
Adjusted EBITDA (1)                      303.5     298.7     876.6     873.0
Adjusted net income                      117.0     127.0     323.0     333.7
Adjusted net income per unit              0.29      0.38      0.82      1.02
                                     --------- --------- --------- ---------
                                                                            
(1) Includes non-controlling interest                                       

 
Adjusted net income for the three and nine month periods ended
September 30, 2012, reported above, eliminates the impact of: (a)
additional environmental costs, net of insurance recoveries,
associated with the incidents on lines 14 and 6B; (b) non-cash,
mark-to-market net gains and losses; and (c) non-cash, lower of cost
or market adjustments to product inventory; among other adjustments.
Refer to the Non-GAAP Reconciliations table for additional details. 
Adjusted net income of $117.
0 million for the third quarter of 2012
was $10.0 million lower than the same period from the prior year
primarily due to lower natural gas liquids prices and increased
operating and administrative expenses, which were partially offset by
higher revenues from our liquids pipeline systems.  
"The long-term outlook for the Partnership remains strong as we are
well positioned to grow distributable cash flow based on the
previously announced organic growth projects that enter service in
2013 and 2014. These accretive growth projects strengthen our
pipeline systems and are secured predominantly by a long-term,
low-risk commercial framework including cost-of-service and demand
based contract structures which support our 2 to 5 percent annual
distribution growth target. Our business is mostly about connecting
supply to market demand, and the Partnership's Lakehead system is
ideally positioned to participate in Enbridge Inc.'s US Gulf Coast
and Eastern Access programs. We are in advanced discussions with our
customers to commercially secure the next round of pipeline expansion
to enhance takeaway from the North Dakota Bakken region and to upsize
our Lakehead system through low-cost expansion which will further
solidify our long term distribution growth outlook," said Mark Maki,
president of the Partnership.  
"Achieving our long term targets requires a focus on daily
operations. Safety, reliability, environmental protection and the
integrity of our pipelines is the top priority for management.
Enbridge and the Partnership are committed to achieving industry
leadership in all these areas and we continue to make the operating
and capital investments necessary to achieve this objective," added
Maki. 


 
                                                                            
COMPARATIVE EARNINGS STATEMENT                                              
                                                                            
                                  Three months ended     Nine months ended  
                                     September 30,         September 30,    
                                 --------------------  -------------------- 
(unaudited, dollars in millions                                             
 except per unit amounts)           2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Operating revenue                $ 1,564.3  $ 2,372.2  $ 4,934.9  $ 7,033.1 
Operating expenses:                                                         
  Cost of natural gas              1,048.6    1,805.4    3,320.7    5,496.2 
  Environmental costs, net of                                               
   recoveries                       (134.9)      56.1     (109.0)      44.8 
  Oil measurement adjustments         (2.0)      (2.8)      (9.1)     (61.5)
  Operating and administrative       217.3      181.3      627.5      516.0 
  Power                               38.0       37.7      116.6      107.2 
  Depreciation and amortization       86.8       78.9      256.5      256.9 
                                 ---------  ---------  ---------  --------- 
Operating income                     310.5      215.6      731.7      673.5 
Interest expense                      83.4       78.7      248.8      236.6 
Other income                           4.7          -        4.4        6.0 
                                 ---------  ---------  ---------  --------- 
Income before income tax expense     231.8      136.9      487.3      442.9 
Income tax expense                     2.6        2.1        6.4        5.3 
                                 ---------  ---------  ---------  --------- 
Net income                           229.2      134.8      480.9      437.6 
Less: Net income attributable to                                            
 noncontrolling interest              14.0       12.2       42.1       41.0 
                                 ---------  ---------  ---------  --------- 
Net income attributable to                                                  
 general and limited partner                                                
 ownership interests in Enbridge                                            
 Energy Partners, L.P.           $   215.2  $   122.6  $   438.8  $   396.6 
Less: Allocations to General                                                
 Partner                              42.5       26.7       92.6       73.7 
                                 ---------  ---------  ---------  --------- 
Net income allocable to Limited                                             
 Partners                        $   172.7  $    95.9  $   346.2  $   322.9 
Weighted average Limited Partner                                            
 units (millions)                    289.3      264.6      286.5      257.6 
                                 ---------  ---------  ---------  --------- 
Net income per Limited Partner                                              
 unit (dollars)                  $    0.60  $    0.36  $    1.21  $    1.26 
                                 ---------  ---------  ---------  --------- 

 
COMPARISON OF QUARTERLY RESULTS  
Following are explanations for significant changes in the
Partnership's financial results, comparing the three month period
ended September 30, 2012 with the same period of 2011. 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     Nine months ended  
    Adjusted Operating Income        September 30,         September 30,    
                                 --------------------  -------------------- 
(unaudited, dollars in millions)    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Liquids                          $   153.5  $   169.7  $   468.0  $   465.5 
Natural Gas                           60.2       53.4      156.0      150.8 
Marketing                             (1.2)      (2.8)      (6.9)      (0.3)
Corporate                             (0.5)      (0.5)      (1.4)      (2.5)
                                 ---------  ---------  ---------  --------- 
Adjusted operating income        $   212.0  $   219.8  $   615.7  $   613.5 
                                 ---------  ---------  ---------  --------- 

 
Liquids -- For the three month period ended September 30, 2012
adjusted operating income for the Liquids segment decreased $16.2
million from $169.7 million for September 30, 2011 to $153.5 million.
Higher revenues from an increase in indexed transportation rates on
our liquids pipeline system, in addition to increased revenues from
our Cushing storage business were more than offset by higher
operating and administrative expenses. The increase in operating and
administrative expenses was attributable to enhanced pipeline
integrity initiatives and an increase in regional property taxes.
Volumes on all our liquids pipelines systems remained strong due to
positive crude oil fundamentals, however were lower current quarter
over prior quarter primarily due to scheduled and unscheduled
upstream and refinery maintenance activities.  


 
                                                                            
                                      Three months ended  Nine months ended 
       Liquids Systems Volumes          September 30,       September 30,   
                                     ------------------- -------------------
(thousand barrels per day)              2012      2011      2012      2011  
                                     --------- --------- --------- ---------
Lakehead                                 1,756     1,713     1,808     1,685
Mid-Continent                              214       233       228       225
North Dakota                               206       206       216       186
                                     --------- --------- --------- ---------
Total                                    2,176     2,152     2,252     2,096
                                     --------- --------- --------- ---------

 
Natural Gas -- Quarterly adjusted operating income for the Natural Gas
segment was $60.2 million for the three month period ended September
30, 2012, an increase of $6.8 million from the $53.4 million of
adjusted operating income for the same period in 2011. Adjusted
operating income increased primarily due to additional revenues
realized from our condensate stabilization services, including a
true-up of amounts recognized in the current period related to prior
periods. Condensate stabilization utilizes available processing
capacity to remove light hydrocarbons from the gas well condensate
making it suitable for pipeline transportation. Partially offsetting
the increase in operating income were lower revenues due to lower
natural gas liquids prices, lower volumes from our assets positioned
in dry gas producing regions and an increase in operating and
administrative expenses. 


 
                                                                            
                                Three months ended      Nine months ended   
   Natural Gas Throughput         September 30,           September 30,     
                             ----------------------- -----------------------
(MMBtu per day)                  2012        2011        2012        2011   
                             ----------- ----------- ----------- -----------
East Texas                     1,219,000   1,469,000   1,276,000   1,392,000
Anadarko                       1,065,000   1,039,000   1,023,000   1,007,000
North Texas                      343,000     333,000     330,000     340,000
                             ----------- ----------- ----------- -----------
Total                          2,627,000   2,841,000   2,629,000   2,739,000
                             ----------- ----------- ----------- -----------

 
Marketing -- The Marketing segment reported an adjusted operating loss
of $1.2 million for the three month period ended September 30, 2012,
a decrease of $1.6 million from the $2.8 million of adjusted
operating loss for the same period of 2011. The gas marketing
business continues to be impacted by a weak natural gas pricing
environment and narrow locational basis differentials. 
Partnership Financing -- In September 2012, the Partnership closed an
underwritten public offering and sale of 16,100,000 of its Class A
Common Units, including an over-allotment option, at a sales price to
the public of $28.64. The Partnership received proceeds, net of
underwriting commissions and offering costs, of approximately $446.8
million, which were used to fund a portion of our capital expansion
projects and for general partnership purposes.  
ENBRIDGE ENERGY MANAGEMENT DISTRIBUTION 
Enbridge Energy Management, L.L.C. (NYSE: EEQ) declared a
distribution of $0.5435 per share payable on November 14, 2012 to
shareholders of record on November 7, 2012. 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 November 5, 2012. 
MANAGEMENT REVIEW OF QUARTERLY RESULTS  
Enbridge Partners will review its quarterly financial results and
business outlook in an Internet presentation, commencing at 12:00
p.m. Eastern Time on November 1, 2012. 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://www.media-server.com/m/p/xqoqouuq 
The audio portion of the presentation will be accessible by telephone
at (866) 356-4441 (Passcode: 73086440) and can be replayed until
January 31, 2013 by calling (888) 286-8010 (Passcode: 90239001). 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     Nine months ended  
        Adjusted Earnings            September 30,         September 30,    
                                 --------------------  -------------------- 
 (unaudited, dollars in millions                                            
     except per unit amounts)       2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Net income                       $   229.2  $   134.8  $   480.9  $   437.6 
Lines 6A and 6B incident                                                    
 expenses, net of recoveries        (145.0)      55.0     (125.0)      43.0 
Line 14 incident liability and                                              
 lost revenues                        12.1          -       12.1          - 
Lawsuit settlement                       -          -          -       (9.0)
Oil measurement adjustments              -          -          -      (52.2)
Impact from unusual winter                                                  
 conditions                              -          -          -        9.2 
Option premiums                        1.0          -       (4.2)         - 
Trucking and NGL Marketing legal                                            
 and audit costs                         -          -        7.4          - 
Noncash derivative fair value                                               
 (gains) losses                                                             
  -Liquids                             9.6      (33.7)      (2.7)     (38.5)
  -Natural Gas                        23.9      (15.5)     (11.0)     (16.0)
  -Marketing                           0.7       (1.6)       3.1        0.1 
  -Corporate                           0.3        0.2        0.2        0.5 
Noncash lower cost or market          (0.8)         -        4.3          - 
Net income attributable to                                                  
 noncontrolling interest             (14.0)     (12.2)     (42.1)     (41.0)
                                 ---------  ---------  ---------  --------- 
Adjusted net income                  117.0      127.0      323.0      333.7 
Less: Allocations to General                                                
 Partner                              32.5       26.8       90.3       72.4 
                                 ---------  ---------  ---------  --------- 
Adjusted net income allocable to                                            
 Limited Partners                     84.5      100.2      232.7      261.3 
Weighted average units                                                      
 (millions)                          289.3      264.6      286.5      257.6 
                                 ---------  ---------  ---------  --------- 
Adjusted net income per Limited                                             
 Partner unit (dollars)          $    0.29  $    0.38  $    0.82  $    1.02 
                                 ---------  ---------  ---------  --------- 
                                                                            
                                                                            
                                  Three months ended     Nine months ended  
             Liquids                 September 30,         September 30,    
                                 --------------------  -------------------- 
(unaudited, dollars in millions)    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Operating income                 $   276.8  $   148.4  $   583.6  $   518.8 
Lines 6A and 6B incident                                                    
 expenses, net of recoveries        (145.0)      55.0     (125.0)      43.0 
Line 14 incident liability and                                              
 lost revenues                        12.1          -       12.1          - 
Lawsuit settlement                       -          -          -       (5.6)
Oil measurement adjustments              -          -          -      (52.2)
Noncash derivative fair value                                               
 (gains) losses                        9.6      (33.7)      (2.7)     (38.5)
                                 ---------  ---------  ---------  --------- 
Adjusted operating income        $   153.5  $   169.7  $   468.0  $   465.5 
                                 ---------  ---------  ---------  --------- 
                                                                            
                                                                            
                                  Three months ended     Nine months ended  
           Natural Gas               September 30,         September 30,    
                                 --------------------  -------------------- 
(unaudited, dollars in millions)    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Operating income                 $    36.1  $    68.9  $   159.5  $   157.6 
Impact from unusual winter                                                  
 conditions                              -          -          -        9.2 
Option premiums                        1.0          -       (4.2)         - 
Trucking and NGL Marketing legal                                            
 and audit costs                         -          -        7.4          - 
Noncash derivative fair value                                               
 (gains) losses                       23.9      (15.5)     (11.0)     (16.0)
Noncash lower cost or market          (0.8)         -        4.3          - 
                                 ---------  ---------  ---------  --------- 
Adjusted operating income        $    60.2  $    53.4  $   156.0  $   150.8 
                                 ---------  ---------  ---------  --------- 
                                                                            
                                                                            
                                  Three months ended     Nine months ended  
            Marketing                September 30,         September 30,    
                                 --------------------  -------------------- 
(unaudited, dollars in millions)    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Operating income (loss)          $    (1.9) $    (1.2) $   (10.0) $    (0.4)
Noncash derivative fair value                                               
 (gains) losses                        0.7       (1.6)       3.1        0.1 
                                 ---------  ---------  ---------  --------- 
Adjusted operating income (loss) $    (1.2) $    (2.8) $    (6.9) $    (0.3)
                                 ---------  ---------  ---------  --------- 

 
Adjusted EBITDA (earnings before interest, taxes, depreciation and
amortization) is used as a supplemental financial measurement to
assess l
iquidity 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     Nine months ended  
         Adjusted EBITDA             September 30,         September 30,    
                                 --------------------  -------------------- 
(unaudited, dollars in millions)    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Net cash provided by operating                                              
 activities                      $   351.8  $   191.6  $   708.3  $   652.6 
Changes in operating assets and                                             
 liabilities, net of cash                                                   
 acquired                             18.2       65.5       65.4       75.0 
Interest expense (1)                  83.1       78.5      248.6      236.1 
Income tax expense                     2.6        2.1        6.4        5.3 
Line 6B insurance recoveries                                                
 received (3)                       (150.0)         -     (150.0)     (50.0)
Settlement of interest rate                                                 
 swaps/treasury locks                    -       18.8          -       18.8 
Oil Measurement adjustments (2)          -      (52.2)         -      (52.2)
Impact from unusual weather                                                 
 conditions                              -          -          -        9.2 
Option premiums                        1.0          -       (4.2)         - 
Lawsuit settlement                       -          -          -       (9.0)
Trucking and NGL Marketing legal                                            
 and audit costs                         -          -        7.4          - 
Noncash lower cost or market          (0.8)         -        4.3          - 
Other                                 (2.4)      (5.6)      (9.6)     (12.8)
                                 ---------  ---------  ---------  --------- 
Adjusted EBITDA                  $   303.5  $   298.7  $   876.6  $   873.0 
                                 ---------  ---------  ---------  --------- 
                                                                            
(1) Interest expense excludes unrealized mark-to-market net losses of $0.3  
 million and  $0.2 million for the three and nine month periods ended       
 September 30, 2012, respectively. Excluded from interest expense for the   
 three and nine month periods ended September 30, 2011 are unrealized mark- 
 to-market net losses of $0.2 million and $0.5 million, respectively.       
(2) Represents settlement of a dispute with a supplier on our Lakehead      
 system, which we accrued in the second quarter of                          
2011, with amount being received in July 2011.                              
(3) Excludes $20 million and $85 million of insurance recoveries, which we  
 accrued at September 30, 2012 and 2011, respectively.                      

 
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 13
percent of total U.S. oil imports; while deliveries to Ontario,
Canada satisfy approximately 70 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 13 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 22
percent interest in the Partnership. 
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," "could," "estimate," "expect,"
"forecast," "intend," "may," "plan," "position," "projection,"
"should," "strategy," "will" and similar words. Although we believe
that such forward looking statements are reasonable based on
currently available information, such 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 finan
ce 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; and (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. 
FOR FURTHER INFORMATION PLEASE CONTACT 
Investor Relations Contact:
Sanjay Lad
Toll-free: (866) EEP INFO or (866) 337-4636
E-mail: eep@enbridge.com 
Media Contact:
Terri Larson
Telephone: (713) 353-6317
E-mail: usmedia@enbridge.com  
Website: www.enbridgepartners.com
 
 
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