Enbridge plans to sell $2.3B of assets in 2018

Calgary-based Enbridge which following its acquisition of San Diego, Calif.-based Sempra Energy is now North America’s largest energy infrastructure company, last week announced plans to sell $2.3 billion of non-core assets.

The company is also raising $1.18 billion by selling new shares to pay down debt, and identified $17.30 billion worth of projects it intends to complete through 2020.

The company is realigning its focus as it looks beyond the $28 billion acquisition of Spectra, Kallanish Energy understands.

The company’s announcement of asset sales addressed much of the uncertainty of the last earnings conference call, when executives had been vague on capital allocation and distribution policy, Manash Goswami, senior vice president and portfolio manager at First Asset ETFs, which holds Enbridge shares, told Reuters.

“I think it’s pretty credible,” he said of the asset sales. “They’ve basically kind of addressed all the concerns that the market’s been hung up on.”

Among Enbridge’s future projects is its $6.5 billion Line 3 replacement program, its biggest yet, which seeks to upgrade an oil pipeline from Hardisty, Alberta, to Superior, Wis.

The company said last week it has also identified another $5.51 billion in non-core assets to divest, including unregulated gas gathering and processing businesses and onshore renewables in the U.S. and Canada.

Enbridge is speeding up debt reduction to help strengthen the balance sheet and increase its dividend by 10%.

Chief Executive Al Monaco said Enbridge would concentrate on its three “crown jewel” businesses: liquids pipelines and terminals, natural gas transmission and storage and natural gas utilities.

The company plans to streamline its asset mix to become a pure regulated pipeline and utility business. Enbridge added the model will emphasize low risk and strong growth in the three crown jewel businesses.

“The acquisition of Spectra Energy has significantly diversified our asset base and opportunity set, and repositioned Enbridge for the future,” Monaco said, in a statement.

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