Enbridge to Repay Gov't Loan - Analyst Blog


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Enbridge Inc. ( ENB ) has announced its plan to repay $151 million principal outstanding under the $161 million loan to the U.S. Department of Energy's unit called Western Area Power Administration ("WAPA"). In 2009, the company took this loan from the WAPA under the Transmission Infrastructure Program ("TIP") to launch its Montana-Alberta Tie-Line ("MATL") Project.

The 345-kilometer (215-mile), 230-kilovolt ("KV") electrical transmission line permits to transport power between Great Falls, Montana and Lethbridge, Alberta in Canada. Enbridge expects MATL to be online in fourth-quarter 2012, subject to certain regulatory nods.

The TIP deals with a number of project and program rules to offer guidance to the WAPA for borrowing up to $3.25 billion from the U.S. Treasury to fund the partnerships for developing transmission infrastructure. Subsequently, these lines will deliver renewable energy to market across the region.

As we know that Northern Montana and southern Alberta are renowned for the best wind energy sources in North America. The MATL line will support ongoing development of wind-powered generation resources and allow much-needed energy to flow in both directions. This project is expected to ensure more reliable supplies of electricity into the U.S. Northwest and Alberta.

Currently, the U.S. Environmental Protection Agency continues to roll out new rules and regulations related to the supply of clean energy to all consumers across the sectors. We believe this transmission line will indirectly help the clean energy providers to supply power to the end users. This will also enable Enbridge to improve its financial results.

As of June 30, 2012, Enbridge Inc. had cash and cash equivalents of $650.7 million (Canadian $667 million) compared with $708.9 million (Canadian $723 million) as of December 31, 2011. On top of its financial strength, the company comfortably continues with its transmission line expansion as well as other infrastructure development activities.

In addition, the company also issued debts and commercial papers, and utilized its credit facility to retire its existing debts including the outstanding WAPA loan and fulfill its capital expenditure needs.

We view Enbridge, Inc. as an organization with presence in diversified activities in crude oil and natural gas transportation activities. In addition, the company has strong participation in natural gas gathering, transmission and midstream businesses, and an increasing association with power transmission.

Enbridge Inc. currently holds a Zacks #2 Rank, which translates into a short-term Buy rating.

Calgary, Canada-based Enbridge Inc. is a renowned Canadian organization primarily deals with energy delivery in North America. The company operates both in the U.S. and Canada with crude oil and liquids transportation system. The company's peer is Oiltanking Partners, L.P. ( OILT ).

ENBRIDGE INC (ENB): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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