Enbridge 1

8/7/2019 Enbridge 1

http://slidepdf.com/reader/full/enbridge-1 1/8

COMPANY UPDATE | COMMENTFEBRUARY 4, 2011

Enbridge Inc. (TSX: ENB; NYSE: ENB)

Q4 Earnings Mildly Short of Expectations; Longer-TermOutlook Intact

OutperformAverage RiskPrice: 57.68

Shares O/S (MM): 383.9Dividend: 1.96Float (MM): 347.0Debt to Cap: 64%

Price Target: 62.00Implied All-In Return: 11%Market Cap (MM): 22,143Yield: 3.4%

Strategic Ownership: Noverco - 9.5%

EventEnbridge reported Q4 results.

Investment Opinion

• Q4/10 Results Mildly Short of Expectations. Normalized Q4/10 EPS was$0.64 compared to our estimate of $0.66 and $0.64 in Q4/09. During thequarter, weaker-than-expected results from Feeder & Other in the LiquidsPipelines segment (a number of small items) and Enbridge Gas Distribution(lower incentive earnings) were the main drivers.

• Longer-Term Outlook Intact. There was nothing new during the quarter thachanges our view that the company is likely to grow EPS at an 8% CAGRthrough 2014 based on already secured projects with a potential to reach 10%annual growth through additional projects and/or acquisitions. We continue tosee the potential for mid-decade growth from the core Liquids Pipelinessegment with potential projects including a connection to the Fort Hills oilsands project, connections for other oil sands projects, extensions of theexisting system to new markets and an extension of Southern Lights to FortMcMurray.

• New Incentive Tolling Settlement (ITS) Could Be Announced in theComing Months. The company could announce a new ITS by mid-year for thEnbridge System. As negotiations are ongoing, specifics are not yet availableHowever, management noted on the call that the new ITS is likely to take adifferent form from both the current cost-of-service based agreement (in 2010and the two previous 5-year incentive-based settlements (the last of whichexpired at the end of 2009).

• Moderating 2011 Outlook. We have reduced our 2011 EPS estimate to $2.82

(from $2.86) to primarily reflect lower incentive earnings at EGD in addition a slower-than-forecast ramp in volumes for Enbridge Offshore Pipelines.

• Valuation. Our price target of $62.00/share (unchanged) is based on a forwarP/E of 20x. Reflecting visible and attractive near-term growth and the lowprevailing interest rate environment, we believe that a 20x forward P/E isreasonable as it is within the 10-year historical range of 14x to 22x. We seesupport for a multiple that is in the upper half of the historical range due to thstock's strong total return profile, which we believe will be viewed as attractivin the current market environment.

Priced as of prior trading day's market close, EST (unless otherwise noted).

125 WEEKS 19SEP08 - 02FEB11

35.00

40.00

45.00

50.00

55.00

S O N2008

D J F M A M J J A S O N2009

D J F M A M J J A S O N2010

D J F

HI-04FEB11 59.03

LO/HI DIFF 78.34%

C LOSE 5 8. 51

LO-17OCT08 33.10

4000

8000

12000

PEAK VOL. 15017.6

VOLUME 1782.0

105.00

120.00

135.00

150.00Rel. S&P/TSX COMPOSITE INDEX HI-20FEB09 154.59

LO/HI DIFF 54.59%

CLOSE 130.72

LO-19SEP08 100.00

RBC Dominion Securities Inc.

Robert Kwan, CFA (Analyst)(604) 257-7611; [email protected]

Danny Hung, CA (Associate)(604) 257-7064; [email protected]

Nelson Ng, CFA (Analyst)(604) 257-7617; [email protected]

FY Dec 2009A 2010A 2011E 2012E

EPS (Op) - Basic 2.35 2.65 2.82 3.07

Prev. 2.67 2.86

Div. Yield 2.6 2.9 3.4 3.7

P/E 24.5x 21.8x 20.5x 18.8x

EPS (Op) - FD 2.33 2.63 2.80 3.04

Prev. 2.65 2.84

P/E 24.8x 21.9x 20.6x 19.0x

Annual Div. 1.48 1.70 1.96 2.15

Payout Ratio- Basic 63% 64% 70% 70%

Payout Ratio - FD 64% 65% 70% 71%

EPS (Op) - Basic Q1 Q2 Q3 Q4

2009 0.74A 0.54A 0.42A 0.64A

Prev. 0.65A

2010 0.86A 0.63A 0.51A 0.64A

Prev. 0.66E

2011 0.86E 0.63E 0.57E 0.76E

Prev. 0.87E 0.64E 0.77E

EPS (Op): Amounts are normalized and may not be consistentwith GAAP.

All values in CAD unless otherwise noted.

For Required Non-U.S. Analyst and Conflicts Disclosures, see page 6.

8/7/2019 Enbridge 1


2

Q4/10 Results Slightly Short of ExpectationsEnbridge’s Q4/10 normalized EPS was $0.64 compared to our estimate of $0.66 and $0.64 in Q4/09. The modest variance wasprimarily due to lower earnings from the Liquids Pipelines segment (lower-than-forecast Feeder Pipelines and Other results) and theGas Distribution segment (lower-than-expected Enbridge Gas Distribution results), partially offset by stronger earnings from theSponsored Investments segment (higher-than-forecast Alberta Clipper U.S. results) and lower Corporate Costs.

Exhibit 1: Normalized Results (In $MM except per share figures)RBC CM

Q4/10 Q4/10E Q4/09 2010 2009 Comments for Q4 Results

Liquids Pipelines

Enbridge System $84 $81 $92 $327 $296

Enbridge Regional Oil Sands System 15 20 20 73 72 Unusual timing issues -- operating costs; booking of tax payments

Spearhead 6 5 6 29 17

Southern Lights 20 16 14 82 58 Appears to be slightly higher than the annual run-rate

Feeder Pipelines and Other (8) 4 9 1 12 Unusual items -- Olympic (op costs timing); Toledo (Line 6B related); high bus dev exp

$117 $126 $141 $512 $454

Gas Distribution

Enbr idge Gas Distribution $46 $58 $53 $135 $129 Lower-than-expected incent ive earnings

Other Gas Distribution 8 5 7 29 26

$54 $63 $60 $164 $155

Gas Pipelines, Processing & En. Serv.

Enbr idge Offshore Pipelines $2 $5 $10 $23 $29 Lower volumes impacted by dr illing morator ium

Alliance Pipeline US 6 7 7 25 27Vector Pipeline 4 5 4 15 16

Aux Sable 10 8 4 37 26

Energy Services 6 1 0 20 29 G ood quarter due to stronger margins for storage and transportation

Other 3 2 (10) 10 (12)

$31 $28 $15 $130 $114

Sponsored Investments

Enbridge Energy Partners $27 $25 $22 $117 $99

Alberta Clipper U.S. 10 7 6 42 8 We expected a modest reversal from the strong Q3/10 results

Enbridge Income Fund 11 11 11 45 45

$48 $43 $39 $204 $151

Corporate and Other ($12) ($16) ($16) ($31) ($20) Favourable tax recoveries

Normalized Earnings $238 $245 $239 $979 $855

Wtd. Avg. Shares (MM) 373 373 371 370 364

Normalized EPS (Basic) $0.64 $0.66 $0.64 $2.65 $2.35

Source: Company reports; RBC Capital Markets estimates

• Liquids Pipelines Short of Forecast, Mostly Due to Feeder Pipelines and Other. Earnings from the segment in Q4/10 were$117 million compared to our estimate of $126 million. The weaker-than-forecast earnings were mostly attributable to the FeederPipelines and Other segment due to a decrease in earnings from the Olympic Pipeline (timing of operating costs) and the ToledoPipeline (negative impact of Line 6B shutdown), as well as higher business development costs (greater level of activity). Lower-than-forecast earnings in Q4/10 on the Regional Oil Sands System (due to timing issues such as higher operating costs and bookingof tax payments) were mostly offset by stronger earnings at Southern Lights (partially due to timing differences).

• Gas Distribution Segment Results Lower Due to EGD. Results from the Gas Distribution segment were negatively impacted bylower-than-expected incentive earnings for Enbridge Gas Distribution.

• Gas Pipelines, Processing and Energy Services Segment Higher Than Expectations. The better-than-expected results were

mainly due to higher earnings from the Energy Services segment as a result of stronger margins for storage and transportation inQ4/10, partially offset by the negative impact of the deep water drilling moratorium on Enbridge Offshore Pipelines.

• Sponsored Investments Benefitted from EEP and Clipper. The segment performed modestly better than forecast due to slightlyhigher earnings from Enbridge Energy Partners and the U.S.-portion of Alberta Clipper.

• Corporate Costs Positively Impacted by Recoveries. Lower-than-forecast corporate costs in Q4/10 were partially due to positiveincome tax recoveries in Q4/10. The Corporate segment included Noverco’s results, which were in line with our estimates inQ4/10.

Enbridge IncFebruary 4, 2011

8/7/2019 Enbridge 1


3

Outlook and Project Highlights• New ITS Could Be Announced in the Coming Months. The company could announce a new Incentive Tolling Settlement (ITS)

by mid-year for the Enbridge System. As negotiations continue, specifics are not yet available. However, management noted on thecall that the new ITS is likely to take a different form from both the current cost-of-service based agreement (in 2010) and the twoprevious 5-year incentive-based settlements (the last of which expired at the end of 2009). There are a number of differentpossibilities for a new agreement, although we think it is possible that the new ITS could consist of a combination of incentives(e.g., batch quality) and a degree of volumetric risk in an attempt to drive increased availability of capacity in light of the downtime

experienced in 2010 (both spills and integrity work). We have assumed that earnings on the system will be re-based in 2011 (hencethe decline in our forecast for the Enbridge System), but in return it is possible that the company will move to indexed-based tolls,which could add an organic growth profile by de-coupling tolls from rate base.

• Focus in 2011 Remains on Growth. Enbridge will continue to focus on growth in all of its business segments with key focus areasincluding the expansion of oil sands infrastructure, developments in the Bakken and Three Forks formations, new renewableenergy projects and growth opportunities in its natural gas businesses.

• Ownership in Noverco Increased to 38.9% for $145 Million. Enbridge announced that it will acquire an additional 6.8% interestin Noverco for $145 million. Following the closing date later this year pending regulatory approvals, Enbridge will own a 38.9%stake in Noverco and will become one of the two sole shareholders.

• $90 Million Acquisition of 20 MW of Solar Projects. On February 1, 2011, Enbridge announced that it entered into agreementsto acquire two new solar projects with a total generation capacity of 20 MW in Ontario for roughly $90 million. The 5 MW Tilburysolar project was completed in December 2010 while the 15 MW Amherstburg II project is expected to be completed in Q3/11. Thegeneration output of both facilities will be sold to the Ontario Power Authority under 20-year PPAs.

• $150 Million Expansion of U.S. Gulf Coast Facility. On January 31, 2011, Enbridge announced that it plans to expand thecondensate processing capacity of its facility in Venice, Louisiana, to accommodate additional natural gas production from therecently sanctioned Olympus offshore oil and gas development. Natural gas production from Olympus will move to the facility atVenice via Enbridge’s Mississippi Canyon offshore pipeline. The cost of this expansion, which will more than double the facility’scapacity to approximately 12,000 bpd, is roughly $150 million. The expansion is expected to be in service in late 2013 witheconomics consistent with recent agreements signed for the offshore segment (e.g., minimum base ROE in the 10% range thatprotects against hurricanes and other disruptions plus upside based on volumes).

• Further Expansion of the Athabasca System. On December 16, 2010, Enbridge announced that it will expand its existingAthabasca pipeline that transports oil sands production to Hardisty, AB to its maximum capacity of 570,000 bpd. The expansioncost will be $200 million, which is in addition to the $185 million for the expansion announced in September 2010. Subject toregulatory approval, the expansions are expected to be completed in early 2014.

Modest Revision to 2011 EstimateWe have reduced our 2011 EPS estimate to $2.82 (from $2.86) with some of the primary drivers as follows:

• Lower EGD Incentive Earnings. We have reduced our forecast incentive earnings for EGD to 150 bps (from 200 bps), whichappears to be more in line with the amounts earned in 2010.

• Reduced Earnings for Offshore. The segment has been hit harder than we had previously forecast by the drilling moratorium inthe Gulf. As such, we have reduced our 2011 estimates to reflect a slower improvement in volumes through 2011.

Although we have made some changes to the various segments, we remain comfortable with our overall 2012 EPS estimate of $3.07.As shown in Exhibit 2, the major changes that we see through 2012 include:

• Rebasing of the Enbridge System: As previously noted, we expect Enbridge System’s earnings to be re-based downward in 2011

as part of a potential new ITS.

• Continued Growth on the Regional Oil Sands System Due to Higher Volumes: The Athabasca and Waupisoo systems willbenefit from increased volumes as production in the oil sands continues to build. We have reflected higher earnings from theincreased volumes in addition to the Christina Lake expansion, which is expected to come into service in Q3/11.

• Southern Lights Expected to Decrease: In 2010, Southern Lights benefited from non-cash AEDC that was calculated at ahigher/contract ROE compared to the expected return upon initial commissioning due to lower volumes shipped. In addition, thesegment also booked earnings related to a portion of the system that was “leased” to the Enbridge System (i.e., earnings werebooked in Southern Lights and an equal cost was booked in the Enbridge System), which is not expected to continue in 2011 andbeyond. As this was an intercorporate transaction, there was no impact on overall consolidated earnings.


8/7/2019 Enbridge 1


4

• Renewables Should Begin to Meaningfully Contribute to Earnings: Consistent with Enbridge’s current reporting, our estimatefor the green energy business is included in the “Other” line item under Gas Pipelines, Processing & Energy Services. We expectearnings to grow in 2011 and 2012 due to the Sarnia Solar and Talbot Wind projects (in service in late 2010), Greenwich Wind(Q3/11 in service), Amherstburg II solar (Q3/11 in service) and Cedar Point Wind (Q4/11 in service).

• Enbridge Energy Partners to Continue to Grow: We forecast a higher earnings contribution from EEP due to a full-year fromthe Elk City acquisition, and additional liquids and gas infrastructure expansions, coupled with higher distribution incentiveearnings for Enbridge Inc. as the general partner.

• Corporate Should Benefit from Noverco Acquisition and Hedges: Although costs should rise modestly, we expect the overallsegment’s “expense” to decrease slightly due to a greater contribution from Noverco (incremental interest) in addition to FX andinterest rate hedges at rates that are more favourable in the coming years than in 2010.

Exhibit 2: Summary Financial Forecast (In $MM except per share figures)

Old

Liquids Pipelines 2009 2010 Q1/11E Q2/11E Q3/11E Q4/11E 2011E 2012E 2011E 2012E

Enbridge System $296 $327 $82 $76 $79 $80 $317 $323 $ 317 $323

Enbridge Regional Oil Sands System 72 73 19 22 22 22 84 101 84 101

Spearhead 17 29 5 5 5 5 20 20 20 20

Southern Lights 58 82 18 18 18 18 73 73 73 73

Feeder Pipelines and Other 12 1 3 3 3 3 12 20 15 22

$454 $512 $128 $124 $127 $127 $505 $537 $ 508 $540

Gas Distribution

Enbridge Gas Distribution $129 $135 $70 $23 $0 $46 $139 $150 $ 148 $156

Other Gas Distribution 26 29 13 9 4 6 32 36 28 30

$155 $164 $83 $32 $4 $52 $170 $186 $ 176 $186

Gas Pipelines, Processing & En. Serv.

Enbridge Offshore Pipelines $29 $23 $4 $5 $8 $9 $26 $32 $33 $35

Alliance Pipeline US 27 25 6 6 6 6 25 24 25 24

Vector Pipeline 16 15 4 4 4 4 16 16 16 16

Aux Sable 26 37 10 10 10 10 40 35 40 35

Energy Services 29 20 8 3 2 7 20 20 15 15

Other (12) 10 6 4 7 17 34 69 34 64$114 $130 $38 $32 $37 $53 $161 $196 $ 163 $189

Sponsored Investments

Enbridge Energy Partners $99 $117 $39 $39 $39 $39 $156 $185 $ 158 $182

Alberta Clipper U.S. 8 42 11 11 11 11 45 47 45 47

Enbridge Income Fund 45 45 12 12 12 12 47 47 47 47

$151 $204 $62 $62 $62 $62 $249 $280 $ 251 $277

Corporate and Other ($20) ($31) $10 ($13) ($14) ($5) ($22) ($18) ($ 23) ( $18)

Normalized Earnings $855 $979 $321 $237 $216 $290 $1,063 $1,181 $1,075 $1,174

Wtd. Avg. Shares (MM) 364 370 375 377 379 381 377 384 376 382

Normalized EPS (Ba sic) $2.35 $2.65 $0.86 $0.63 $0.57 $0.76 $ 2.82 $3.07 $2 .86 $3.0 7

Dividend Per Share $1.48 $1.70 $1.96 $2.15 $1 .96 $2.1 5

Payout Ratio 63% 64% 70% 70% 69% 70%

Source: Company reports; RBC Capital Markets estimates


8/7/2019 Enbridge 1


5

ValuationOur price target of $62.00/share is based on a forward P/E of 20x. Reflecting visible and attractive near-term growth and the lowprevailing interest rate environment, we believe that a 20x forward P/E is reasonable as it is within the 10-year historical range of 14xto 22x. We see support for a multiple that is in the upper half of the historical range due to the stock's strong total return profile, whichwe believe will be viewed as attractive in the current market environment.

Price Target ImpedimentOur price target is based on the assumption that Enbridge can complete the list of projects that it is pursuing on attractive economic

terms and that the company will continue to announce new projects that will help drive future annual EPS growth in the 10% range.Our price target further assumes that the company's risk profile does not materially change.

Company DescriptionEnbridge is involved in energy transportation and distribution in North America and internationally. The company owns and operatesthe world's longest crude oil and liquids transportation system, which primarily transports crude oil from the Western CanadaSedimentary Basin to markets in eastern Canada, the U.S. Midwest and Mid-Continent. In addition, Enbridge owns and operatesCanada's largest natural gas distribution company. The company also has interests in two sponsored investments: Enbridge EnergyPartners (26% interest) and Enbridge Income Fund (72% interest).


8/7/2019 Enbridge 1


6

Required Disclosures

Non-U.S. Analyst Disclosure

Danny Hung and Nelson Ng (i) are not registered/qualified as research analysts with the NYSE and/or FINRA and (ii) may not beassociated persons of the RBC Capital Markets, LLC and therefore may not be subject to FINRA Rule 2711 and NYSE Rule 472restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Conflicts Disclosures

The analyst(s) responsible for preparing this research report received compensation that is based upon various factors, including totalrevenues of the member companies of RBC Capital Markets and its affiliates, a portion of which are or have been generated byinvestment banking activities of the member companies of RBC Capital Markets and its affiliates.

A member company of RBC Capital Markets or one of its affiliates received compensation for investment banking services fromEnbridge Inc. in the past 12 months.

RBC Dominion Securities Inc. makes a market in the securities of Enbridge Inc. and may act as principal with regard to sales orpurchases of this security.

Royal Bank of Canada, together with its affiliates, beneficially owns 1 percent or more of a class of common equity securities ofEnbridge Inc..

A member company of RBC Capital Markets or one of its affiliates received compensation for products or services other thaninvestment banking services from Enbridge Inc. during the past 12 months. During this time, a member company of RBC CapitalMarkets or one of its affiliates provided non-securities services to Enbridge Inc..

RBC Capital Markets is currently providing Enbridge Inc. with non-securities services.

RBC Capital Markets has provided Enbridge Inc. with investment banking services in the past 12 months.

RBC Capital Markets has provided Enbridge Inc. with non-securities services in the past 12 months.

The author is employed by RBC Dominion Securities Inc., a securities broker-dealer with principal offices located in Toronto, Canada.

Explanation of RBC Capital Markets Equity Rating System

An analyst's 'sector' is the universe of companies for which the analyst provides research coverage. Accordingly, the rating assigned to

a particular stock represents solely the analyst's view of how that stock will perform over the next 12 months relative to the analyst'ssector average.RatingsTop Pick (TP): Represents best in Outperform category; analyst's best ideas; expected to significantly outperform the sector over 12months; provides best risk-reward ratio; approximately 10% of analyst's recommendations.Outperform (O): Expected to materially outperform sector average over 12 months.Sector Perform (SP): Returns expected to be in line with sector average over 12 months.Underperform (U): Returns expected to be materially below sector average over 12 months.Risk Qualifiers (any of the following criteria may be present):Average Risk (Avg): Volatility and risk expected to be comparable to sector; average revenue and earnings predictability; nosignificant cash flow/financing concerns over coming 12-24 months; fairly liquid.Above Average Risk (AA): Volatility and risk expected to be above sector; below average revenue and earnings predictability; maynot be suitable for a significant class of individual equity investors; may have negative cash flow; low market cap or float.Speculative (Spec): Risk consistent with venture capital; low public float; potential balance sheet concerns; risk of being delisted.

Distribution of RatingsFor the purpose of ratings distributions, regulatory rules require member firms to assign ratings to one of three rating categories - Buy,Hold/Neutral, or Sell - regardless of a firm's own rating categories. Although RBC Capital Markets' ratings of Top Pick/Outperform,Sector Perform and Underperform most closely correspond to Buy, Hold/Neutral and Sell, respectively, the meanings are not the samebecause our ratings are determined on a relative basis (as described above).


8/7/2019 Enbridge 1


7

Distribution of Ratings

RBC Capital Markets, Equity Research

Investment BankingServ./Past 12 Mos.

Rating Count Percent Count Percent

BUY[TP/O] 693 50.70 187 26.98

HOLD[SP] 612 44.70 134 21.90

SELL[U] 63 4.60 8 12.70

Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q124

32

40

48

56

64

2008 2009 2010 2011

04/01/08OP:50

10/17/08OP:44

02/17/09OP:46

07/30/09OP:47

10/07/09OP:49

12/03/09OP:50

01/05/10OP:54

07/29/10OP:57

10/06/10OP:62

Rating and Price Target History for: Enbridge Inc. as of 02-02-2011 (in CAD)

Legend:

TP: Top Pick; O: Outperform; SP: Sector Perform; U: Underperfor m; I: Initiation of Research Coverage; D: Discontinua tion of Research Coverage; NR: Not Rated; NA: Not Available;

RL: Recommended List - RL: On: Refers to date a security was placed on a recommended list, while RL Off: Refers to date a security was removed from a recommended list.

Created by BlueMatrix

References to a Recommended List in the recommendation history chart may include one or more recommended lists or modelportfolios maintained by a business unit of the Wealth Management Division of RBC Capital Markets, LLC. These RecommendedLists include the Prime Opportunity List (RL 3), a former list called the Private Client Prime Portfolio (RL 4), the Guided PortfolioPrime Income (RL 6), the Guided Portfolio: Large Cap (RL 7), the Guided Portfolio: Dividend Growth (RL 8), and the GuidedPortfolio: Midcap 111 (RL9). The abbreviation 'RL On' means the date a security was placed on a Recommended List. Theabbreviation 'RL Off' means the date a security was removed from a Recommended List.

Conflicts Policy

RBC Capital Markets Policy for Managing Conflicts of Interest in Relation to Investment Research is available from us on request. Toaccess our current policy, clients should refer tohttps://www.rbccm.com/global/file-414164.pdf or send a request to RBC CM Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South Tower,Toronto, Ontario M5J 2W7. We reserve the right to amend or supplement this policy at any time.

Dissemination of Research and Short-Term Trading Calls

RBC Capital Markets endeavors to make all reasonable efforts to provide research simultaneously to all eligible clients, having regardto local time zones in overseas jurisdictions. RBC Capital Markets' equity research is posted to our proprietary websites to ensure

eligible clients receive coverage initiations and changes in ratings, targets and opinions in a timely manner. Additional distributionmay be done by the sales personnel via email, fax or regular mail. Clients may also receive our research via third-party vendors. Pleasecontact your investment advisor or institutional salesperson for more information regarding RBC Capital Markets' research. RBCCapital Markets also provides eligible clients with access to SPARC on the Firm's proprietary INSIGHT website. SPARC containsmarket color and commentary, and may also contain Short-Term Trade Ideas regarding the publicly-traded common equity of subjeccompanies on which the Firm currently provides equity research coverage. SPARC may be accessed via the following hyperlinkhttps://www.rbcinsight.com. A Short-Term Trade Idea reflects the research analyst's directional view regarding the price of the subjectcompany's publicly-traded common equity in the coming days or weeks, based on market and trading events. A Short-Term TradeIdea may differ from the price targets and recommendations in our published research reports reflecting the research analyst's views ofthe longer-term (one year) prospects of the subject company, as a result of the differing time horizons, methodologies and/or otherfactors. Thus, it is possible that a subject company's common equity that is considered a long-term 'sector perform' or even an


https://www.rbccm.com/global/file-414164.pdf

https://www.rbcinsight.com/

https://www.rbcinsight.com/

https://www.rbccm.com/global/file-414164.pdf

8/7/2019 Enbridge 1


8

'underperform' might be a short-term buying opportunity as a result of temporary selling pressure in the market; conversely, a subjectcompany's common equity rated a long-term 'outperform' could be considered susceptible to a short-term downward price correction.Short-Term Trade Ideas are not ratings, nor are they part of any ratings system, and the Firm generally does not intend, nor undertakesany obligation, to maintain or update Short-Term Trade Ideas. Securities and Short-Term Trade Ideas discussed in SPARC may not besuitable for all investors and have not been tailored to individual investor circumstances and objectives, and investors should maketheir own independent decisions regarding any securities or strategies discussed herein.

Analyst Certification

All of the views expressed in this report accurately reflect the personal views of the responsible analyst(s) about any and all of thesubject securities or issuers. No part of the compensation of the responsible analyst(s) named herein is, or will be, directly oindirectly, related to the specific recommendations or views expressed by the responsible analyst(s) in this report.

DisclaimerRBC Capital Markets is the business name used by certain subsidiaries of Royal Bank of Canada, including RBC Dominion Securities Inc., RBC Capital Markets, LLC,Royal Bank of Canada Europe Limited and Royal Bank of Canada - Sydney Branch. The information contained in this report has been compiled by RBC CapitalMarkets from sources believed to be reliable, but no representation or warranty, express or implied, is made by Royal Bank of Canada, RBC Capital Markets, itsaffiliates or any other person as to its accuracy, completeness or correctness. All opinions and estimates contained in this report constitute RBC Capital Marketsjudgement as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. Nothing in this reporconstitutes legal, accounting or tax advice or individually tailored investment advice. This material is prepared for general circulation to clients and has been preparedwithout regard to the individual financial circumstances and objectives of persons who receive it. The investments or services contained in this report may not besuitable for you and it is recommended that you consult an independent investment advisor if you are in doubt about the suitability of such investments or services. Thisreport is not an offer to sell or a solicitation of an offer to buy any securities. Past performance is not a guide to future performance, future returns are not guaranteedand a loss of original capital may occur. RBC Capital Markets research analyst compensation is based in part on the overall profitability of RBC Capital Markets, whichincludes profits attributable to investment banking revenues. Every province in Canada, state in the U.S., and most countries throughout the world have their own lawregulating the types of securities and other investment products which may be offered to their residents, as well as the process for doing so. As a result, the securitiesdiscussed in this report may not be eligible for sale in some jurisdictions. This report is not, and under no circumstances should be construed as, a solicitation to act asecurities broker or dealer in any jurisdiction by any person or company that is not legally permitted to carry on the business of a securities broker or dealer in thatjurisdiction. To the full extent permitted by law neither RBC Capital Markets nor any of its affiliates, nor any other person, accepts any liability whatsoever for anydirect or consequential loss arising from any use of this report or the information contained herein. No matter contained in this document may be reproduced or copiedby any means without the prior consent of RBC Capital Markets.

Additional information is available on request.

To U.S. Residents:This publication has been approved by RBC Capital Markets, LLC (member FINRA, NYSE), which is a U.S. registered broker-dealer and which accepts responsibilityfor this report and its dissemination in the United States. Any U.S. recipient of this report that is not a registered broker-dealer or a bank acting in a broker or dealercapacity and that wishes further information regarding, or to effect any transaction in, any of the securities discussed in this report, should contact and place orders withRBC Capital Markets, LLC.To Canadian Residents:This publication has been approved by RBC Dominion Securities Inc.(member IIROC). Any Canadian recipient of this report that is not a Designated Institution inOntario, an Accredited Investor in British Columbia or Alberta or a Sophisticated Purchaser in Quebec (or similar permitted purchaser in any other province) and tha

wishes further information regarding, or to effect any transaction in, any of the securities discussed in this report should contact and place orders with RBC DominionSecurities Inc., which, without in any way limiting the foregoing, accepts responsibility for this report and its dissemination in Canada.To U.K. Residents:This publication has been approved by Royal Bank of Canada Europe Limited ('RBCEL') which is authorized and regulated by Financial ServicesAuthority ('FSA'), inconnection with its distribution in the United Kingdom. This material is not for general distribution in the United Kingdom to retail clients, as defined under the rules othe FSA. However, targeted distribution may be made to selected retail clients of RBC and its affiliates. RBCEL accepts responsibility for this report and itdissemination in the United Kingdom.To Persons Receiving This Advice in Australia:This material has been distributed in Australia by Royal Bank of Canada - Sydney Branch (ABN 86 076 940 880, AFSL No. 246521). This material has been preparedfor general circulation and does not take into account the objectives, financial situation or needs of any recipient. Accordingly, any recipient should, before acting onthis material, consider the appropriateness of this material having regard to their objectives, financial situation and needs. If this material relates to the acquisition opossible acquisition of a particular financial product, a recipient in Australia should obtain any relevant disclosure document prepared in respect of that product andconsider that document before making any decision about whether to acquire the product.To Hong Kong Residents:This publication is distributed in Hong Kong by RBC Investment Services (Asia) Limited and RBC Investment Management (Asia) Limited, licensed corporationsunder the Securities and Futures Ordinance or, by Royal Bank of Canada, Hong Kong Branch, a registered institution under the Securities and Futures Ordinance. Thismaterial has been prepared for general circulation and does not take into account the objectives, financial situation, or needs of any recipient. Hong Kong personswishing to obtain further information on any of the securities mentioned in this publication should contact RBC Investment Services (Asia) Limited, RBC InvestmentManagement (Asia) Limited or Royal Bank of Canada, Hong Kong Branch at 17/Floor, Cheung Kong Center, 2 Queen's Road Central, Hong Kong (telephone numberis 2848-1388).To Singapore Residents:This publication is distributed in Singapore by RBC (Singapore Branch) and RBC (Asia) Limited, registered entities granted offshore bank status by the MonetaryAuthority of Singapore. This material has been prepared for general circulation and does not take into account the objectives, financial situation, or needs of anyrecipient. You are advised to seek independent advice from a financial adviser before purchasing any product. If you do not obtain independent advice, you shouldconsider whether the product is suitable for you. Past performance is not indicative of future performance.

.® Registered trademark of Royal Bank of Canada. RBC Capital Markets is a trademark of Royal Bank of Canada. Used under license.Copyright © RBC Capital Markets, LLC 2011 - Member SIPC

Copyright © RBC Dominion Securities Inc. 2011 - Member CIPFCopyright © Royal Bank of Canada Europe Limited 2011

Copyright © Royal Bank of Canada 2011All rights reserved


Documents

Enbridge 1