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Pipeliner Enbridge on a roller-coaster Company hikes dividend, faces possible delay of oil sands projects, opposition by B.C. First Nations to proposed Kitimat pipeline Gary Park For Petroleum News
Enbridge, which operates the longest crude oil pipeline system in the world, believes it can deliver results in keeping with its stature.
The Calgary-based company, flying into economic storms, is hiking its dividend and earnings projections.
But there are a couple of threatening black clouds on the horizon — notably the outlook after 2012 if oil sands projects are delayed and resistance from a First Nations group in northern British Columbia to plans for a pipeline that would open up tanker routes to Asia for production from the Alberta oil sands.
Enbridge Chief Executive Officer Pat Daniel announced his company will pay out 37 cents a share in March compared with 33 cents currently and forecast operating earnings will rise about 20 percent to a range of C$2.18-$2.32 a share.
He said that will occur regardless of a wave of delays, deferrals and cancellations of oil sands projects.
“We have some good news and we think the world could use a little good news right now,” he told reporters.
He said the rosy outlook is possible because no more than 5 percent of Enbridge’s total earnings face exposure to commodity or foreign exchange, giving Enbridge the opportunity to more accurately forecast earnings growth than a company that carries commodity sensitivity.
Enbridge and its Canadian rival, TransCanada, have already reinforced that view by sidestepping stock market decimation in recent weeks.
Oil sands, debt are issues However, UBS Securities analyst Grant Hofer cautioned that Enbridge “faces a little bit of pressure” as oil sands expansion enters a slowdown.
Although Enbridge and TransCanada represent “very good defensive names” on the stock market, they are also both carrying a lot of debt, he said.
Hofer noted that even if the Petro-Canada-led Fort Hills project is delayed or cancelled, Enbridge can meet its targets by using available funds for share buybacks.
Daniel conceded it is “tougher than it’s ever been” to raise capital for ambitious projects, but he thinks the current crisis is temporary and better times will return for oil sands developers.
Aboriginal resistance But its hopes of reactivating the Northern Gateway pipeline project from Alberta to the deepwater port in Kitimat are encountering stern aboriginal resistance.
A spokesman for the Council of the Haida Nation said the community will never “accept tanker traffic where we would bear the burden of risk and oil spills in our waters. Our liveloods would be jeopardized.”
The spokesman also said neighboring First Nations are similarly concerned about the impact of a pipeline on their land and water and are “willing to stand united.”
Representatives of six First Nations agreed a month ago that current consultation efforts by Enbridge and the Canadian government fall short of acceptable standards for genuine engagement.
“Regulators are not respecting the fact that we have a responsibility to protect our ancestral territories, rights, title and interests,” said a spokesman for the Wet’suwet’en First Nations.
“Gateway is a major project with significant risks,” he said.
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