Enbridge May Divest Part of Midstream Properties in Canada
Enbridge Inc. ENB is planning to divest a chunk of its midstream properties in Canada, per Bloomberg. The leading energy infrastructure company will reportedly get $1.6 billion from the assets, engaged in the gathering and processing of natural gas.
Previously, Spectra Energy was the owner of the midstream infrastructures, spread over Alberta and British Columbia. In late 2016, Spectra Energy and Enbridge had decided to merge for creating the largest energy infrastructure company in North America.
As per Bloomberg data, the acquisition involved debt of around $14.5 billion. In fact, following the merger, Enbridge lost 28.2%, reflecting investors’ apprehensions over the outcome of the acquisition.
Reportedly, Enbridge will take assistance from Royal Bank of Canada for the deal. However, neither Enbridge nor Royal Bank of Canada made any comments on the deal.
Last November, Enbridge — belonging to the Zacks Oil & Gas Pipeline industry — announced the identification of several non-core properties worth as much as C$10 billion, of which roughly C$3 billion will likely be divested through 2018. Enbridge is anticipated to focus on growth projects and strengthen its balance sheet with the proceeds from the sale.
Headquartered in Calgary, Canada, Enbridge’s overall operational results were not impressive last year. Through 2017, the company generated $5.1 billion in operating cashflow, which was not sufficient to meet capital spending, resulting in negative free cashflow of $829 million.
The stock carries a Zacks Rank #4 (Sell). A few better-ranked players in the energy space are W&T Offshore, Inc. WTI, Pioneer Natural Resources Company PXD and Concho Resources Inc. CXO. While W&T Offshore carries a Zacks Rank #2 (Buy), Pioneer Natural and Concho sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
W&T Offshore is primarily an upstream energy player. It is expected to witness year-over-year earnings growth of 3.6% in 2018.
Pioneer Natural Resources is an upstream energy firm. It has an average positive earnings surprise of 66.9% for the last four quarters.
Concho is also an upstream energy company. It will likely see a year-over-year surge of 73.2% in 2018 earnings.
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