Enbridge Energy Partners Reports 2012 Earnings and Announces 2013 Financial Guidance

Enbridge Energy Partners Reports 2012 Earnings and Announces 2013 Financial 
Guidance 
HOUSTON, TX -- (Marketwire) -- 02/13/13 --   Enbridge Energy
Partners, L.P.'s (NYSE: EEP) ("Enbridge Partners" or "the
Partnership") key financial results for the fourth quarter of 2012,
compared to the same period in 2011, were as follows: 


 
                                                                            
                                   Three months ended   Twelve months ended 
                                      December 31,          December 31,    
                                 --------------------- ---------------------
(unaudited, dollars in millions                                             
 except per unit amounts)           2012       2011       2012       2011   
                                 ---------- ---------- ---------- ----------
Net income                       $     54.3 $    227.4 $    493.1 $    624.0
Net income per unit                    0.07       0.64       1.27       1.99
                                 ---------- ---------- ---------- ----------
Adjusted EBITDA (1)                   267.5      295.4    1,144.1    1,182.9
Adjusted net income                    87.2      116.4      410.2      464.6
Adjusted net income per unit           0.18       0.32       0.99       1.39
                                 ---------- ---------- ---------- ----------
(1) Includes non-controlling interest.                                      

 
Adjusted net income for the three and twelve month periods ended
December 31, 2012, reported above, eliminates the impact of: (a)
additional environmental costs, net of insurance recoveries,
associated with the incidents on Lines 14 and 6B; and (b) non-cash,
mark-to-market net gains and losses; among other adjustments. Refer
to the Non-GAAP Reconciliations table below for additional details.  
Adjusted net income of $87.2 million for the fourth quarter of 2012
was $29.2 million lower than the same period from the prior year
primarily due to lower natural gas liquids ("NGL") prices and
increased operating and administrative expenses.  
"Adjusted earnings for 2012 are not reflective of our expectations
primarily
 as a result of weak natural gas and NGL prices that
impacted our performance. While we believe natural gas and NGL
fundamentals will gradually improve, we remain focused on our
objective of delivering sustainable and prudent growth to our
unitholders," said Mark Maki, President of the Partnership. "Above
all else, Enbridge and the Partnership are committed to achieving
industry leadership in the areas of safety and integrity and we
continue to make the operating and capital investments necessary to
achieve this objective," added Maki. 
"The long-term outlook for the Partnership remains strong. Our $8.5
billion secured growth program is proceeding on schedule and will
progressively transform the Partnership towards an even lower risk
business model as the cash flows are secured predominantly by
long-term, low-risk commercial frameworks such as cost-of-service or
demand-based contract structures. The Partnership's distributable
cash flow growth will begin to accelerate once these accretive growth
projects enter service, which will solidify our long-term
distribution growth outlook of 2 to 5 percent annually. We expect
business fundamentals will continue to improve later in 2013. As a
result, we estimate the Partnership's EBITDA for 2013 will increase
in excess of 10% and will be between $1,250 million and $1,350
million," noted Maki.  


 
                                                                            
COMPARATIVE EARNINGS STATEMENT                                              
                                                                            
                                  Three months ended    Twelve months ended 
                                     December 31,          December 31,     
                                 --------------------  -------------------- 
(unaudited, dollars in millions                                             
 except per unit amounts)           2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Operating revenue                $ 1,771.2  $ 2,076.7  $ 6,706.1  $ 9,109.8 
Operating expenses:                                                         
  Cost of natural gas              1,249.4    1,603.9    4,570.1    7,100.1 
  Environmental costs, net of                                               
   recoveries                         17.7     (158.1)     (91.3)    (113.3)
  Oil measurement adjustments         (2.4)      (1.9)     (11.5)     (63.4)
  Operating and administrative       224.5      189.0      852.0      705.0 
  Power                               32.2       37.6      148.8      144.8 
  Depreciation and amortization       88.3       82.9      344.8      339.8 
                                 ---------  ---------  ---------  --------- 
Operating income                     161.5      323.3      893.2      996.8 
Interest expense                      96.2       84.0      345.0      320.6 
Other income                           5.6        0.5       10.0        6.5 
                                 ---------  ---------  ---------  --------- 
Income before income tax expense      70.9      239.8      558.2      682.7 
Income tax expense                     1.7        0.2        8.1        5.5 
                                 ---------  ---------  ---------  --------- 
Net income                            69.2      239.6      550.1      677.2 
Less: Net income attributable to                                            
 noncontrolling interest              14.9       12.2       57.0       53.2 
                                 ---------  ---------  ---------  --------- 
                                                                            
Net income attributable to                                                  
 general and limited partner                                                
 ownership interests in Enbridge                                            
 Energy Partners, L.P.           $    54.3  $   227.4  $   493.1  $   624.0 
Less: Allocations to General                                                
 Partner                              31.2       52.4      123.9      103.5 
                                 ---------  ---------  ---------  --------- 
Net income allocable to Limited                                             
 Partners                        $    23.1  $   175.0  $   369.2  $   520.5 
Weighted average Limited Partner                                            
 units (millions)                    302.9      276.4      290.6      262.3 
                                 ---------  ---------  ---------  --------- 
Net income per Limited Partner                                              
 unit (dollars)                  $    0.07  $    0.64  $    1.27  $    1.99 
                                 ---------  ---------  ---------  --------- 

 
COMPARISON OF QUARTERLY RESULTS
 Following are explanations for
significant changes in the Partnership's financial results, comparing
the three month period ended December 31, 2012 with the same period
of 2011. The comparison r
efers to adjusted operating income, which
excludes the effect of non-cash and nonrecurring items (see Non-GAAP
Reconciliations section below). 


 
                                                                            
                                  Three months ended    Twelve months ended 
    Adjusted Operating Income        December 31,          December 31,     
                                 --------------------  -------------------- 
(unaudited, dollars in millions)    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Liquids                          $   133.0  $   161.5  $   601.0  $   627.0 
Natural Gas                           42.9       51.4      198.9      216.7 
Marketing                             (1.4)      (1.2)      (8.3)      (1.5)
Corporate                             (0.9)       0.3       (2.3)      (2.2)
                                 ---------  ---------  ---------  --------- 
Adjusted operating income        $   173.6  $   212.0  $   789.3  $   840.0 
                                 ---------  ---------  ---------  --------- 

 
Liquids - For the three month period ended December 31, 2012, adjusted
operating income for the Liquids segment decreased $28.5 million from
$161.5 million for December 31, 2011 to $133.0 million. Higher
revenues from an increase in index transportation rates, in addition
to higher storage revenues from the Partnership's Cushing storage
facilities, were more than offset by lower volumes on our liquids
pipeline systems and higher operating and administrative expenses.
The increase in operating and administrative expenses was
attributable to higher pipeline integrity costs, higher depreciation
expense related to assets placed into service and an increase in
workforce related costs. Additionally, fourth quarter 2012 results
reflected approximately $9 million of costs to complete remediation
of crude oil releases, primarily around our terminals. 


 
                                                                            
                                   Three months ended   Twelve months ended 
     Liquids Systems Volumes          December 31,          December 31,    
                                 --------------------- ---------------------
(thousand barrels per day)          2012       2011       2012       2011   
                                 ---------- ---------- ---------- ----------
Lakehead                              1,737      1,742      1,790      1,700
Mid-Continent                           207        228        223        226
North Dakota                            173        219        206        197
                                 ---------- ---------- ---------- ----------
Total                                 2,117      2,189      2,219      2,123
                                 ---------- ---------- ---------- ----------

 
Natural Gas - Adjusted operating income for the Natural Gas segment
was $42.9 million for the three month period ended December 31, 2012,
which was $8.5 million lower than the same period in 2011. Fourth
quarter 2012 adjusted operating income was impacted by lower revenues
due to lower natural gas and natural gas liquids prices, lower
volumes on our East Texas system and higher operating and
administrative expenses.  


 
                                                                            
                                   Three months ended   Twelve months ended 
     Natural Gas Throughput           December 31,          December 31,    
                                 --------------------- ---------------------
(MMBtu per day)                     2012       2011       2012       2011   
                                 ---------- ---------- ---------- ----------
East Texas                        1,233,000  1,335,000  1,266,000  1,378,000
Anadarko                            998,000  1,030,000  1,017,000  1,013,000
North Texas                         333,000    327,000    330,000    337,000
                                 ---------- ---------- ---------- ----------
Total                             2,564,000  2,692,000  2,613,000  2,728,000
                                 ---------- ---------- ---------- ----------

 
Marketing - The Marketing segment reported an adjusted operating loss
of $1.4 million for the three month period ended December 31, 2012,
an increase of $0.2 million from the $1.2 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. 
MANAGEMENT REVIEW OF QUARTERLY RESULTS AND 2013 FINANCIAL GUIDANCE 
Enbridge Partners will review its financial results for the quarter
ended December 31, 2012 and present its 2013 financial guidance in a
live Internet presentation, commencing at 10:00 a.m. Eastern Time on
February 14, 2013. 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 on the Partnership's website at the
link below. 
EEP Events and Presentations:  
www.enbridgepartners.com/Investor-Relations/EEP/Events-and-Presentations/ 
Webcast link: http://www.media-server.com/m/p/7sorrxmc 
The audio portion of the presentation will be accessible by telephone
at (877) 299-4454 (Passcode: 37159171) and can be replayed until May
14, 2013 by calling (888) 286-8010 (Passcode: 59784432). 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    Twelve months ended 
        Adjusted Earnings            December 31,          December 31,     
                                 --------------------  -------------------- 
(unaudited, dollars in millions                                             
 except per unit amounts)           2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Net income                       $    69.2  $   239.6  $   550.1  $   677.2 
Lines 6A and 6B incident                                                    
 expenses, net of recoveries          10.0     (160.0)    (115.0)    (117.0)
Line 14 incident liability and                                              
 lost revenues  
                      (1.6)         -       10.5          - 
Lawsuit settlement                       -          -          -       (9.0)
Oil measurement adjustments              -          -          -      (52.2)
Impact from unusual winter                                                  
 conditions                              -          -          -        9.2 
Option premiums                       (0.1)       6.8       (4.3)       6.8 
Trucking and NGL Marketing legal                                            
 and audit costs                         -          -        7.4          - 
Trucking and NGL Marketing prior                                            
 period adjustment                       -       18.4          -       32.9 
Noncash derivative fair value                                               
 (gains) losses                                                             
  -Liquids                             1.4       24.1       (1.3)     (14.4)
  -Natural Gas                         6.7        0.2       (4.3)     (15.8)
  -Marketing                             -       (0.8)       3.1       (0.7)
  -Corporate                          20.8        0.3       21.0        0.8 
Noncash lower cost or market          (4.3)         -          -          - 
Net income attributable to                                                  
 noncontrolling interest             (14.9)     (12.2)     (57.0)     (53.2)
                                 ---------  ---------  ---------  --------- 
Adjusted net income                   87.2      116.4      410.2      464.6 
Less: Allocations to General                                                
 Partner                              31.9       27.6      122.2      100.3 
                                 ---------  ---------  ---------  --------- 
Adjusted net income allocable to                                            
 Limited Partners                     55.3       88.8      288.0      364.3 
Weighted average units                                                      
 (millions)                          302.9      276.4      290.6      262.3 
                                 ---------  ---------  ---------  --------- 
Adjusted net income per Limited                                             
 Partner unit (dollars)          $    0.18  $    0.32  $    0.99  $    1.39 
                                 ---------  ---------  ---------  --------- 
                                                                            
                                                                            
                                                                            
                                  Three months ended    Twelve months ended 
             Liquids                 December 31,          December 31,     
                                 --------------------  -------------------- 
(unaudited, dollars in millions)    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Operating income                 $   123.2  $   297.4  $   706.8  $   816.2 
Lines 6A and 6B incident                                                    
 expenses, net of recoveries          10.0     (160.0)    (115.0)    (117.0)
Line 14 incident liability and                                              
 lost revenues                        (1.6)         -       10.5          - 
Lawsuit settlement                       -          -          -       (5.6)
Oil measurement adjustments              -          -          -      (52.2)
Noncash derivative fair value                                               
 (gains) losses                        1.4       24.1       (1.3)     (14.4)
                                 ---------  ---------  ---------  --------- 
Adjusted operating income        $   133.0  $   161.5  $   601.0  $   627.0 
                                 ---------  ---------  ---------  --------- 
                                                                            
                                                                            
                                  Three months ended    Twelve months ended 
           Natural Gas               December 31,          December 31,     
                                 --------------------  -------------------- 
(unaudited, dollars in millions)    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Operating income                 $    40.6  $    26.0  $   200.1  $   183.6 
Impact from unusual winter                                                  
 conditions                              -          -          -        9.2 
Option premiums                       (0.1)       6.8       (4.3)       6.8 
Trucking and NGL Marketing prior                                            
 period adjustment                       -       18.4          -       32.9 
Trucking and NGL Marketing legal                                            
 and audit costs                         -          -        7.4          - 
Noncash derivative fair value                                               
 (gains) losses                        6.7        0.2       (4.3)     (15.8)
Noncash lower cost or market          (4.3)         -          -          - 
                                 ---------  ---------  ---------  --------- 
Adjusted operating income        $    42.9  $    51.4  $   198.9  $   216.7 
                                 ---------  ---------  ---------  --------- 
                                                                            
                                  Three months ended    Twelve months ended 
            Marketing                December 31,          December 31,     
                                 --------------------  -------------------- 
(unaudited, dollars in millions)    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Operating loss                   $    (1.4) $    (0.4) $   (11.4) $    (0.8)
Noncash derivative fair value                                               
 (gains) losses                          -       (0.8)       3.1       (0.7)
                                 ---------  ---------  ---------  --------- 
Adjusted operating income loss   $    (1.4) $    (1.2) $    (8.3) $    (1.5)
                                 ---------  ---------  ---------  --------- 

 
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 in
the United States. 


 
                                                                            
                                  Three months ended    Twelve months ended 
         Adjusted EBITDA             December 31,          December 31,     
                                 --------------------  -------------------- 
(unaudited, dollars in millions)    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Net cash provided by operating                                              
 activities                      $   142.7  $   393.0  $   851.0  $ 1,045.6 
Changes in operating assets and                                             
 liabilities, net of cash                                                   
 acquired                             65.5       36.0      180.9      111.0 
Interest expense (1)                  75.4       83.7      324.0      319.8 
Income tax expense                     1.7        0.2        8.1        5.5 
Line 6B insurance recoveries                                                
 received (2)                        (20.0)    (235.0)    (220.0)    (285.0)
Settlement of interest rate                                                 
 swaps/treasury locks                    -          -          -       18.8 
Oil measurement adjustments              -          -          -      (52.2)
Impact from unusual weather                                                 
 conditions                              -          -          -        9.2 
Option premiums                       (0.1)       6.8       (4.3)       6.8 
Lawsuit settlement                       -          -          -       (9.0)
Trucking and NGL Marketing legal                                            
 and audit costs                         -          -        7.4          - 
Trucking and NGL Marketing prior                                            
 period adjustment                       -       18.4          -       32.9 
Noncash lower cost or market          (4.3)         -          -          - 
Other                                  6.6       (7.7)      (3.0)     (20.5)
                                 ---------  ---------  ---------  --------- 
Adjusted EBITDA                  $   267.5  $   295.4  $ 1,144.1  $ 1,182.9 
                                 ---------  ---------  ---------  --------- 
                                                                            
(1) Interest expense excludes unrealized mark-to-market net losses of $20.8 
    million and $21.0 for the three and twelve month periods ended December 
    31, 2012, respectively. Excluded from interest expense for the three and
    twelve month periods ended December 31, 2011 are unrealized mark-to-    
    market net losses of $0.3 million and $0.8 million, respectively.       
                                                                            
(2) Excludes $50.0 million of insurance recoveries for the year ended       
    December 31, 2011, which were accrued at December 31, 2011. These       
    insurance recoveries were received in the first quarter of 2012 and are 
    included in the twelve month period ended December 31, 2012.            

 
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 15 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 areas, deliver approximately 2.5 billion cubic feet of natural
gas daily. Enbridge Partners is recognized by Forbes as one of the
100 Most Trustworthy Companies in America. 
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 of the Partnership 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 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; 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 (the "SEC"), 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: (877) 496-8142
E-mail: usmedia@enbridge.com 
Website: enbridgepartners.com 
 
 
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