Enbridge Profit Drops on Derivatives,

Enbridge Inc., the largest transporter of Canadian crude to the U.S., said fourth-quarter profit declined on derivatives contracts losses and a reduction in the value of its offshore natural gas pipelines.

Net income dropped to C$146 million ($146 million), or 18 cents a share, from C$159 million, or 21 cents, a year earlier, the Calgary-based company said in a statement today. Excluding one-time items, per-share profit missed the 44-cent average of 14 analysts’ estimates compiled by Bloomberg. Sales fell 1.9 percent to C$7.17 billion.

Added production from Alberta’s oil sands and the Bakken Shale formation has prompted Enbridge to expand and reverse pipeline routes to refineries on the U.S. Gulf Coast and in Canada’s eastern provinces. The company today said it will join with Energy Transfer Partners LP on a project to convert the Trunkline system from natural gas to oil, moving crude between Illinois and the Gulf.

“Western Canadian and United States north western crude oil production is facing significant market access constraints,” Chief Executive Officer Al Monaco said in the statement. “As a result, price discounting of this oil production relative to global pricing continues to be a major industry concern.”

Enbridge owns and operates Canada’s largest oil-pipeline network, spanning 24,738 kilometers (15,372 miles) and shipping more than 2.2 million barrels of crude and liquids a day, according to its website. The company is investing C$15 billion in the next three years to add capacity for 1 million barrels of Alberta crude, Monaco said in a speech last month.

Gas Cost

Quarterly earnings from its liquids pipeline division fell 33 percent to C$136 million from C$203 million a year earlier, as the company reported a loss from derivatives contracts on the Canadian Mainline system.

The company also reported a C$105 million cost for certain offshore pipelines, mostly gas systems in the Gulf of Mexico. Enbridge said it explored alternative uses for the system and because of “changing competitive conditions in the fourth quarter of 2012, the company concluded that such alternatives were no longer likely to proceed.”

Enbridge rose 0.5 percent to C$44.36 at the close in Toronto. The shares have gained 3.1 percent this year and have 15 buy, one hold and two sell ratings from analysts.

To contact the reporter on this story: Jeremy van Loon in Calgary at jvanloon@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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