Oil and gas pipelines operator Enbridge Inc. (ENB,ENB.TO) Wednesday reported a decline in profit for the second quarter, primarily reflecting fair value loss on derivatives, compared to fair value gains on derivatives recognized last year. Adjusted earnings, however, increased from the prior-year levels.
Separately, Enbridge Energy Partners, L.P. (EEP), Enbridge's 27% partnership, announced its plans to acquire Elk City Natural Gas Gathering and Processing System in Texas Panhandle from Atlas Pipeline Partners in US$682 million deal.
The Calgary, Canada-based company's second-quarter earnings applicable to common shareholders dropped to C$138 million or C$0.37 per common share from C$393 million or C$1.08 per common share a year ago.
The decrease in earnings primarily reflected the recognition of C$88 million unrealized fair value losses on derivative financial instruments used to manage foreign exchange risk in the second quarter of 2010, compared with C$115 million unrealized fair value gains recognized in the second quarter of 2009. The prior-year quarter was also benefited from foreign exchange gains of C$68 million and gain on sale of investment in NTP of C$25 million.
Adjusted earnings for the second quarter, however, increased to C$232 million or C$0.63 per common share from C$195 million or C$0.54 per common share in the prior year.
Total revenues for the quarter increased to C$3.50 billion from C$2.87 billion last year. Commodity sales increased to C$2.72 billion from C$2.22 billion a year ago. Transportation and other services revenues rose to C$780 million from C$652 million in the prior year.
Looking forward, Patrick Daniel, president and chief executive, said, "With new projects entering service on schedule and on budget, we are on track for the upper half of our 2010 full year adjusted earnings guidance of $2.50 to $2.70 per share."
On July 27, the Enbridge board declared quarterly dividends of $0.425 per common share and $0.34375 per Series A Preferred Share. Both dividends are payable on September 1, 2010 to shareholders of record on August 13, 2010.
In another release, Enbridge Energy Partners announced that its affiliate, Enbridge Pipelines LP plans to acquire Elk City Gathering and Processing System or ECOP from Atlas Pipeline Partners for $682 million. Enbridge Energy Co., Inc., an indirect wholly owned subsidiary of Enbridge Inc., is the general partner and holds an approximate 27% interest in Enbridge Energy Partners.
The acquisition is anticipated to close by late third quarter or early fourth quarter 2010 and will be accretive to earnings upon integration with the Partnership's Anadarko system. The ECOP system comprises 800 miles of natural gas gathering pipeline, one hydrogen sulfide treating plant, three cryogenic processing plants with a total capacity of 370 million cubic feet per day and a combined current NGL production capability of 20,000 barrels per day.
ENB is currently trading at US$48.77, down US$1.00 or 2.01%, on a volume of 0.21 million shares on the NYSE. On the Toronto Stock Exchange, ENB is currently trading at C$50.54, down C$1.01 or 1.96%, on a volume of 0.99 million shares.
EEP is currently trading at US$56.90, down US$0.70 or 1.22%, on a volume of 0.43 million shares on the NYSE.
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