Enbridge (ENB) Upbeat on Mainline, Aims Full Capacity by 2026

Enbridge Inc. ENB is optimistic about the prospects of its Mainline pipeline system, as Canada oil production is anticipated to grow significantly, potentially surpassing the country's pipeline export capacity by 2026, per a Bloomberg report.

During its investor day in New York, Enbridge projected Canada oil production to increase more than half a million barrels per day before 2030.

The positive outlook comes despite previous concerns that the Trans Mountain pipeline expansion, which aims to elevate the company’s capacity to 890,000 barrels per day, would reduce the demand for Enbridge's Mainline network. However, due to construction delays, Trans Mountain’s completion is only expected in the coming months, whereas Canada oil production has been on the rise, with record-breaking productions reported by major producers.

Alberta’s crude oil production hit a record high in 2023, maintaining a strong performance into 2024. Enbridge has, thus, maintained its forecast for Mainline, expecting to transport three million barrels per day in 2024, slightly under the previous year's average. The company's president, Greg Ebel, stated that the Mainline network might undergo small expansions to meet the increasing demand, focusing on optimizing the current system.

Furthermore, Enbridge recently secured a tolling agreement for the Mainline, effective until 2028. This deal is expected to attract additional shipments, especially with Trans Mountain's pending tolling structure, which will need to reflect its escalated construction costs, now estimated to be 10% above the previous $30.9-billion projection.

Amid these developments, Enbridge plans to invest $500 million in U.S. growth initiatives, including the expansion of its Gray Oak pipeline and additional storage capacity at its Texas terminal, to bolster its North America energy infrastructure footprint. With these strategies, Enbridge is poised to capitalize on the growing demand for oil transportation, reinforcing its position in the North America energy sector.

Zacks Rank & Stocks to Consider

Currently, Enbridge carries a Zack Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked companies mentioned below. Each of these three companies presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Valaris VAL is the industry leader in offshore drilling services across all water depths and geographies. Operating a high-quality rig fleet of ultra-deepwater drillships, versatile semisubmersibles and modern shallow-water jackups, the company has experience operating in nearly every major offshore basin.

The Zacks Consensus Estimate for VAL’s 2024 earnings per share (EPS) is pegged at $4.75. Valaris has witnessed upward earnings estimate revisions for 2024 in the past 60 days. VAL’s 2024 earnings are expected to soar 118.5% year over year.

Murphy USA Inc. MUSA is a leading independent retailer of motor fuel and convenience merchandise in the United States.

The Zacks Consensus Estimate for MUSA’s 2024 EPS is pegged at $25.58. The company has a Zacks Style Score of B for Value and Growth. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.

Energy Transfer ET is a publicly traded limited partnership focused on diverse energy assets in the United States. The company’s core operations involve natural gas midstream services, transportation, storage, crude oil facilities and marketing assets.

The Zacks Consensus Estimate for ET’s 2024 EPS is pegged at $1.44. The company has witnessed upward earnings estimate revisions for 2024 in the past 30 days. ET’s 2024 earnings are expected to rise 32.1% year over year.

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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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