Enbridge Inc., the largest transporter of Canadian crude to the U.S., reported an 88 percent increase in second-quarter profit as it moved more natural gas on its pipeline system.
Net income rose to C$259 million ($264 million), or 34 cents a share, from C$138 million, or 18 cents, a year earlier, the Calgary-based company said in a statement today. Excluding costs to settle shipper disputes as well as gains and losses from contracts used to hedge against price and currency fluctuations, per-share profit was 2 cents more than the average of 12 analysts’ estimates compiled by Bloomberg.
“Liquids pipelines was a little weaker than we were looking for,” Lanny Pendill, an analyst with Edward Jones in St. Louis, said in a telephone interview today. Pendill rates the company a “buy” and doesn’t own shares. “That was offset by stronger earnings from gas.”
Enbridge transported an average of 2.68 million barrels of crude and petroleum liquids a day on its pipelines during the second quarter, a decline of 9.2 percent from a year earlier. Gas distribution rose 19 percent to 75 billion cubic feet.
Revenue rose 42 percent to C$4.98 billion in the quarter from C$3.51 billion a year earlier. Profit climbed in the quarter due to gains on derivatives contracts and higher earnings in its gas-distribution and energy-services businesses, the company said.
Enbridge fell 47 cents, or 1.6 percent, to C$29.72 at 4:17 p.m. on the Toronto Stock Exchange. The shares, which have gained 5.6 percent this year, have five buy ratings and nine holds from analysts.
The company is considering expanding its proposed Monarch oil pipeline with a segment to move crude from North Dakota’s Bakken formation and Canada’s oil sands to the Gulf Coast, Chief Executive Officer Patrick Daniel said on an investor conference call today.
The proposed Monarch North line would use a combination of existing Enbridge infrastructure and new construction to carry as much as 300,000 barrels a day from Chicago to an oil-storage hub in Cushing, Oklahoma. It would offer shippers the ability to deliver oil to Minnesota, Chicago, Cushing and the Gulf Coast, Daniel said.
“It’s that flexibility around those delivery options that really holds the appeal,” he said.
A pipeline with the capability to move crude from Canada’s oil sands to the Gulf Coast would compete with TransCanada Corp.’s $15 billion Keystone line. The company has been waiting since 2008 for approval on a final leg of that system, known as Keystone XL, from the U.S. State Department. Enbridge’s plan wouldn’t require State Department approval because it doesn’t cross an international border, Daniel said.
Enbridge delivers more than 2.2 million barrels of oil and liquids a day on average, making it the largest conduit of crude into the U.S., according to its website.