Enbridge Inc Q2 FY2026 Earnings Call

reporting slides. We will try to keep the call to roughly one hour, and in order to answer as many questions as possible, we will be limiting questions to one plus a single follow-up if necessary. We will be prioritizing questions from the investment community, so if you are a member of the media, please direct your inquiries to our communications team, who will be happy to respond. As always, our investor relations teams will be available after the call for any follow-up questions. On to slide two, where I will remind you that we will be referring to forward-looking information on today's presentation and Q&A. By its nature, this information contains forecast assumptions and expectations about future outcomes, which are subject to the risks and uncertainties outlined here and discussed more fully in our public disclosure filings. We will also be referring to non-GAAP measures summarized below. With that, I'll turn it over to Greg Ebel.

Well, thanks very much, Marlon, and good morning, everyone, and thanks for joining us on the call today. We finished the first half of the year with a solid quarter two, reflecting strong financial performance and setting us up to achieve our 2026 guidance. Utilization remained high across all four businesses, including strong Q2 mainline volumes, averaging 3.1 million barrels per day. Alongside our partners in the Gulf, we began commissioning the Blackcomb Pipeline during the quarter and are on track to bring it online by year end. We also brought the Enbridge-Houston oil terminal into service during the quarter. And within LIQUID's pipelines, we sanctioned the Wisconsin Line 5 relocation project. In gas transmission, we signed an exclusive option agreement allowing Enbridge to acquire the TTC connector pipeline along the Gulf Coast, which connects Trace Palacios gas storage to Freeport LNG. In the Permian, we sanctioned the Bayrunner Twin Project, which alongside the initial Bayrunner pipeline will serve Rio Grande's LNG facility along the U.S. Gulf Coast. All said, we are well on track to secure up to $20 billion in new projects in the 2026-27 timeframe. Now let's dive right into the quarter's presentation. As we outline here, it is truly an exciting time to be in the energy industry. There is a widening array of opportunities in front of all four core franchises at Enbridge, reflecting possibly the best environment for growth that we've had in recent memory. That is visible in our $50 billion of organic growth capital opportunities through 2030, and the fact that we've already sanctioned approximately $9 billion of capital in 2026. On the gas transmission front, we're hearing from customers in all regions of our footprint, including the U.S. Northeast, Midwest, and Southeast. All are looking for additional capacity to support unprecedented power and LNG demand. In liquids, we're evaluating a suite of optimizations across our systems to enable the wave of growth being discussed in both Canada and the United States. Energy policy is shifty, and with the right implementation by governments, we expect real tailwinds across the continent, enabling project FIDs of critical liquids infrastructure investment. At our utilities, a combination of population growth, power needs, while maintaining affordability, are driving very strong rate-based growth, particularly in the higher-returning U.S. markets we serve. And finally, in our power business, we're continuing to leverage our core partnerships with hyperscalers like Meta to secure long-term, quick-cycle projects. Our secure growth backlog has grown consistently these past two years, alongside a continuous improvement in project returns. We're leveraging our scale, experience, and incumbency to improve build multiples, creating value for our customers and shareholders in ways that differentiate us from peers. Now let's dive into the business units. What is becoming increasingly clear is that the energy industry has re-entered a growth phase somewhat reminiscent of the 2012 to 2015 time period. As producers' confidence improves and the policy environment becomes increasingly supportive of growing production, new infrastructure will be required to support future growth across the continent. In the WCSB, Enbridge is uniquely positioned across both the regional oil sands system and our mainline and market access network to help meet that infrastructure demand. Within the oil sands region, our network of 30 gathering lateral and mainline pipelines serves approximately 50% of all oil sands production in Alberta. We also have some latent capacity on those assets that can be optimized to support new and existing customers, leveraging our significant infrastructure to move product to both Edmonton and Hardesty hubs. On the condensate front, Southern Lights imports some 200,000 barrels per day into Canada, and the NorLight system can distribute well over 200,000 barrels per day of diluent further within Alberta for our WCSB customers and has additional capacity. We expect those systems to play an increasingly important and expanding role as production grows through the next decade. Beyond our regional assets, construction is advancing on mainline optimization phase one and the southern Illinois connector as we advance 180,000 barrels per day of incremental capacity. Notably, these represent the first Canadian liquid's U.S. egress expansions to reach FID since 2017. We are also adding reliability and extending the useful life of our super system through our $2 billion mainline capital investment program that goes right through 2028. Pad 3 continues to be the premier market for incremental Canadian production. We see this in the recent successful recontracting of the majority of volumes on both Spearhead and Flanagan-South, extending those commitments into the 2030s and 40s, respectively. Recent alignment between producers and governments continues to improve the outlook for future WCSB production growth. As our customers work with governments to finalize and implement fiscal, regulatory, and emissions frameworks, which in turn will help frame their long-term development plans. We expect MLO2 and our broader opportunity set to evolve to meet industry needs. In the near term, we're focused on advancing expansions on Flanagan South and Southern Access Extensions as the next phase of sequenced growth across our mainline and market access system. This quarter, we sanctioned the Line 5 relocation project in Wisconsin. This billion-dollar investment supports critical energy infrastructure serving the Great Lakes region. Construction is well underway with a quick cycle in service date expected in early 2027. Today, we are connected to approximately 75% of North America's refining capacity and continue to provide the lowest cost, most reliable market access solutions for our customers. Taken together, our established footprint provides us with the depth of opportunity embedded within our liquids franchise today. Whether production growth requires additional local or long-haul takeaway capacity, diluent transportation, storage, or gathering, Enbridge is uniquely positioned to customize and provide the infrastructure solutions needed to support the next phase of oil sands development. The same could be said for our natural gas business, which we'll take a look at right now. Gas transmission continues to benefit from strong fundamentals across LNG exports, utility demand, industrial development, and, of course, growing power generation and data center requirements. This involves brownfield projects all across our footprint, including Valley Crossing, Texas Eastern, the Vector Pipeline, and our systems in the U.S. Southeast. In the U.S. Northeast, we're pleased to announce that our open season on Project Beacon significantly exceeded our initial expectations. We're working with utility, power, and data center customers to advance the project to binding commitments, while also progressing permitting activities, and we'll show further updates later in the year. We signed an exclusive option to acquire TTC Connector, which expands our Gulf Coast presence, connecting Enbridge's Trace-Prolash's natural gas storage operation to Freeport LNG. The project is fully underpinned by long-term take-or-pay contracts with BP. Our intention is to execute that option upon the facility entering service, which is expected around herein. alongside our whistler joint venture partners we also sanctioned bay runner twin to serve additional liquefaction capacity for the rio grande lng facility the blackcomb pipeline continues to progress well and we have started commissioning the pipeline as we work towards a full isd in the second half of the year and in canada we begin construction on the four billion dollar Sunrise expansion of our BC Pipeline system, providing capacity to serve residential, commercial, power generation, and LNG export demand. Now let's move into our utility franchises. Supportive regulatory jurisdictions give us confidence in stable, predictable returns and growth at the utilities. Whether it's capital investment riders, revenue decoupling, or performance-based rates, all four of our utility franchises have a mix of supportive attributes that help provide customers with affordable energy and at the same time allows us to quickly realize a return on capital. As we continue to expand our rate base and serve more customers, timely recovery of capital is critical to supporting continued investment in the system. And we believe all four jurisdictions in which we operate provide constructive regulatory mechanisms that support that objective. We have one active rate case, which is Enbridge Gas, Ohio. And earlier this month, we received the staff response from the Public Utilities Commission. The report was a constructive starting point as we're working towards a settlement for new rates expected to take effect in early 2027. And now I'll move on to the renewables segment. Our renewable power business continues to grow through high-quality projects supported by strong counterparties and long-term contracted cash flows. We are currently constructing over 2 gigawatts of power generation across North America and Europe, including the Sequoia Solar Project that is on track to fully enter service by year end. Through our partnership with META, which now spans four projects, we are on track to construct over 1.4 gigawatts of solar and onshore wind power generation and provide 1.6 gigawatt hours of battery storage. We're continuing to advance over 1.5 gigawatts of additional safe harbored opportunities with Blue Chip Partners. With that, I'll pass it on to Pat to go over our financial performance through the start of the year.

Thanks, Greg. Good morning, everyone. High utilization across all four business units drove another strong quarter, despite continued geopolitical tensions and commodity price volatility. Compared to the second quarter of 2025, adjusted EBITDA increased over 130 million. In liquids, higher spot volumes on the Seaway pipeline and stronger volumes on our main line and line nine, in addition to various optimization initiatives, drove an increase in year-over-year EBITDA. This was partially offset by lower tolls on Line 9. In gas transmission, a constructive rate case outcome at East Tennessee and a phased step up from our previously announced rate settlement in Texas Eastern drove higher EBITDA. Gas distribution benefited from higher base rates following the recent rate cases for Enbridge Gas, Utah and North Carolina. These operating results, along with lower maintenance capital, supported the increase in DCF per share. Earnings per share was slightly down versus prior year due to higher depreciation from assets placed into service and increased interest expense on higher debt principal. Based on our continued momentum and outlook, I'm pleased to reaffirm the 2026 guidance established last December. Our resilient business model continues to deliver strong and predictable results across a wide range of market conditions as demonstrated by performance amid ongoing macroeconomic uncertainty, commodity price volatility and evolving global trade dynamics. Variable contracting in our gas transmission assets and recent strong performance at our Seaway assets provide tailwinds for 2026, while lower market access contributions in LP and higher US interest rates act as headwinds for the full year. Now moving on to our capital allocation priorities which remain unchanged. We continue to equity self-fund our growth and our balance sheet remains strong. We exited the second quarter of 2026 at 5.1 times debt to EBITDA primarily due to the quarter end CAD US spot rate increasing to 142 compared to the average for the quarter of 138. Adjusting for this FX impact, debt to EBITDA would be within our target range for the quarter. Growing our dividend remains central to our strategy. Over the past five years, we've returned $38 billion to shareholders and expect to return between $40 to $45 billion over the next five years. Our $41 billion backlog provides a clear runway for growth through the decade, supported by a disciplined focus on low-risk, accretive brownfield investments. With that, I'll hand it back to Greg to conclude the presentation.

Thank you, Pat. And as we step back and look across the business today, I believe the Enbridge investment proposition has never been stronger. At its foundation is stability, delivered through low-risk utility-like business model and our diversified asset base. This strength is reinforced by predictable cash flows, a disciplined balance sheet, and a proven capital allocation framework. Consistency remains a defining characteristic of our company, demonstrated by 31 consecutive years of dividend increases and a long history of delivering on our commitments to you. Looking forward, the company's growth is supported by our $41 billion secured capital backlog and an even larger growth opportunity set across liquids, natural gas transmission, gas utilities, and renewable power. And perhaps most importantly, we maintain significant and optionality. Few companies have the ability to allocate capital across four complementary energy infrastructure franchises while leveraging the scale, customer relationships, and market positions that Enbridge has built over decades. Taken together, those advantages position us to capture growing demand for reliable, affordable, and sustainable energy while continuing to generate attractive returns for shareholders in ever-changing market conditions. And with that, I'd like to thank you all for listening, and we'll now open the line for your questions.

We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Robert Hope with Scotiabank. Robert, your line is open. Please go ahead.

Good morning, everyone. Maybe we can dive a little bit into the ML of two. In your prepared remarks, you mentioned that it's evolving into a broader set of opportunities. Can you maybe add some colour on what drove this outcome, As well as when could we expect to see incremental clarity on the timing as well as the shape of any opportunities there?

Yeah, let me hand this to Colin, but maybe just let's recognize first and foremost the real possibility that we really are. And I think what is a generational change for the positive for the WCSB, oil and gas production, enhanced infrastructure. And after a couple of decades of producers, frankly, having their hands tied behind their back by governments, the changes proposed by the Canadian Alberta government to free up production growth are really dramatic. That said, until producers see all those proposed changes and implemented, they really are sequencing or re-sequencing what they think their pipeline needs are going to need. So it's really about us customizing solutions for them. But Colin, maybe I'll turn it to you, go deeper into MLO too.

Yeah, yeah, happy to. And yeah, we are quite excited about the coming policy environment. We've been advocating it for years on behalf of industry and Canadians and frankly all North Americans. And it should be a huge tailwind to the incumbent super system we've already built and plumbed into it, which you're familiar with. um however you know producers and governments are still in a non-binding mlu stage um which which is which is fine uh but it'll it'll take likely some quarters to uh flesh that out to negotiate it to convert it to implement it into to law and therefore we don't expect producers to start meaningfully FID production growth yet. And the companion point is, nor do we expect producers to be making binding FIDable commitments to new pipelines until then. Now there's an order of operation, right? Production policy, production pipelines. We've talked about that for many quarters now, and that order of operation will be respected, it looks like. So our competitive response to that is that we are on MLO2, Rob, to your point specifically, is we're disaggregating and resequencing segments of our MLO2 path. And we'll be now focusing on the Chicago South market access segments first. This will effectively move existing egress barrels, existing egress barrels, further south to lower pad two, pad three refining centers and multiple U.S. Gulf Coast export options. we um we'll be expanding the downstream sections uh this will still require significant capital but the scope is simpler and will yield better economics for us here initially now the um the uh downstream section going before the upstream section if you like simply will create a small imbalance in the system, but we expect this to be temporary until the mainline portion is optimized or expanded later. But we think this will be manageable for everyone. And so we've got lots of options. We have lots of mainline optimization designs and scopes and numbers as we've talked about.

And if there is tightness in 2028 resulting from this, um slight delay we'll we'll solve that with with either mlo2 or another mlo uh design and scope for industry yeah i think it's actually rob a better customized fit for the producers because as as uh and i would say for investors in many respects too and and i think you'll see that in the coming quarters and as as colin says you know create some with that re-sequencing or pivoting some of that tightness in the main line, then we'll be ready to solve that bottleneck issue for our customers as that comes into focus as well.

Great. Appreciate the color. And then maybe moving a little bit more north from the main line, you did highlight kind of the regional oil sands franchise, which does have a number of pipes going north and south there.

If we do see a renewed production growth out of the oil sands, can you remind us just you know how much latent capacity you do have on the oil sands pipeline network as well as kind of what some optimization or expansion opportunities could come yeah sure i mean this is i appreciate the question i mean a rising tide should should lift all all boats and we've got you know circa 130 billion dollars of enterprise value already pre-plumbed into this So we do have some latent capacity in the regional area, as you've pointed out, although there will be some bottlenecks in certain parts of that network. Consider we have seven trunk lines that feed from McMurray down to Edmonton and Hardesty. As a reminder, we've got Indigenous partners for 11% of that. but there so there will be some uh immediate investment opportunities where in active conversations with a number of of uh you know producers on that basis and uh um expect to take some some fids on on some incremental capital uh in the near term but there also is some operating leverage in the system rob to your to your question and point yeah it's a really good point rob like and don't forget obviously nor light southern light so the diluent facilities up there too that uh you know we'll see how this all goes out but uh that's going to be an opportunity for us interconnected with that thank you thanks rob your next question comes from the

line of spiro dunas with city spiro your line is open please go ahead thanks operator good morning everybody uh i want to start with with uh return on capital here uh greg you mentioned this being the best environment for growth in over a decade and that's clearly manifesting itself in the opportunity set moving higher but curious what that's translating to when we start to think about returns you know i guess the last data point we got from you on 25 is projects that year we're crossing out of rosie around 11 but i guess we continue to hear customers are now finally sort of recognizing the valued infrastructure in the ground more than before so So I'm curious what you're seeing on your end and if we can expect maybe some upward pressure on that return threshold.

Yeah, I think it depends on where you are. Obviously, you know, in the liquids business, we see the best returns in our capital, just given the size of the footprint, if you will, and the ability, as Colin just mentioned, to use some operating leverage there. And then on the gas pipelines side as well. And it's a difference between Canada and the United States. But look, on the entire base, we're trying to move it up if we can add 100 basis points on a return on capital employed. And that's the target. And we're making good progress on that. That's incredibly valuable. And so it's not just revenue. It's also build multiples. Obviously, that feeds into that, given our size, our ability to buy pipe, our ability to buy compressors, our ability even on the distribution side to buy meters, given the size. So it's not a one thing. It's on all of those fronts. And I think the nature of most of the projects you see us build are Brownfield that helped that as well. So, yeah, you know, 100 basis points on the enterprise value obviously creates some real opportunity. Look, that's harder to do with the pure regulated elements of it, like the distribution company, but making sure that we actually earn our regulated rate of return in each of those areas. And I know Michelle and her team have done a nice job of moving that up to make sure you fully get that. That may in investors' minds be, well, of course you're going to do that, but that actually just doesn't fall out. So all of those pieces, and given the size of the base, that 100 basis point move, extremely valuable to us.

Got it. It's great to hear. Second question quickly, maybe just going to Project Beacon. As you noted, received significantly more interest than you all expected. And I realize maybe there's more updates to come, but it's curious, you know, can you talk about your ability to maybe expand the scope or maybe potentially sort of develop a second phase of the project to accommodate all that demand?

Matthew's here, so I'll turn that to Matthew. Yeah, thanks for the question. This is really a great example of how we're seeing, as Greg talked about, gas demand across all of our footprint in gas transmission right now for all kinds of requirements. I mean, some of that is obviously power and data centers, and some of it's just catch up in terms of being behind and building infrastructure. And I think Beacon and New England is probably the best example of that, where everyone knows we've needed more gas pipeline capacity into there for quite a while. We are right now working on Algonquin Enhancement there, which is a 70,000 a day project based on the interest we got for Beacon, which would be another phase, as you alluded to. We would expect that to be multiple times of that size that we're currently working on, actually, you know, in a phase. You talked about different phases, and there's a real recognition we found in the response to the open season of the need for that capacity, for affordability and reliability, to reduce emissions from oil burning power as well, and energy costs generally. We've got studies that suggest, you know, depending on how big this project is, it could save over a billion dollars for utility customers a year in New England. So it's very, very compelling. And we're really pleased that our customers and all the stakeholders there are recognizing the importance of it. So it's something we're definitely going to pursue commercially here as the need is very strong. Of course, there's a lot of hurdles to pass. And as you all know, permitting is the number one thing there. So we'll obviously maintain our discipline as we pursue this and ensure that the permitting risk is very manageable. But we see this as a very promising project, one of many across our entire systems here going forward.

Hey, Spira, I think the other, I think Matthew outlined it well, but his last point is that to your first question as well, us having good regulatory excellence in the way we do these things and making sure we're not taking on inordinate risk and quickly get through regulatory hearings and filings. That also goes to improving our returns too, right? The quicker we can get from contracts to regulatory to actually getting that cash to work is critical. And we're seeing that right across our entire businesses. But this project, that'll be very important for us.

That's great. Great color.

Your next question comes from the line of Manav Gupta with UBS. Manav, your line is open.

Please go ahead. good morning i wanted to go back a little and you know two or three years ago you guys were barely present in the permian gas now you're kind of you know one of those people who is leading the charge two big pipes coming on and then other opportunities which we are seeing you know this uh twin for the bay runner uh can you talk about your permian gas strategy and what's going in the basin and all the ways Enbridge can benefit from it?

Sure go to Matthew yeah you're right well first of all thanks for the compliment I think the teams successively in gas transmission have made a real move there through whitewater which I think you're talking about but I'm sure Matthew will want to touch on the LNG and storage strategy there because all that is very much tied back into the Permian.

Yeah thanks a lot for the question it's something that we've looked at strategically and advanced very intentionally in the last few years, you know, obviously our position in the whitewater assets and now the sanctioning of this second phase at Bayrunner, which is, which is great. There's a, you know, there's a lot more to do there just in those assets in terms of expansion. And it's not just in the main pipelines, but there's also potential storage expansion you know for example uh in in that footprint um and then downstream as well and that's probably the next big opportunity is just you know when that gas hits kind of the uh corpus or mainly the houston market where does it go from there and we have the ability to move that gas around with our texas eastern footprint in and through the gulf coast area and that gas is going to want to continue to move further east for various purposes you know industrial and as greg mentioned lng and so we're pursuing a whole bunch of stuff on that front and then finally on the storage front you know we've we've talked about our storage expansion and last quarter we announced the expansion of trace palachios which receives a lot of that gas we've got you know about 50 almost 50 bcf a day of expansion across our own wholly owned gulf coast storage facilities. So lots of opportunity there. And we recognize, appreciate you raising that.

Hey, Manav, the other, yeah, it's a great question. You will not be surprised that this is a replication strategy that Matthew and before him, Cynthia and Alan here, who's running the power business now, have built for a long time. But it's a replication of Colin and his team's strategy as we built up from the water in Ingleside, then back in on the oil side for Grey Oak and those pipes and continue to look at those opportunities. So this has worked well. This is how you build super system. This is what a good super system looks like. And we're going to keep doing it both on the oil and gas side. So I think the coming quarters will have some exciting elements to that on both fronts.

Perfect. My quick follow up here is because so many good things are going on in the company. Sometimes the one part of the portfolio which doesn't get enough credit, in our opinion, is your renewables portfolio. I don't think there are that many companies out there that have a 1.4 gigawatt partnership with Meta. And then I think the tax credit it gives you. So can you talk a little bit more about your renewables portfolio and all the good things that are happening over there?

Yeah, I think absolutely. And think since zen bridge day uh in uh just about 14 15 months ago we've actually fid three and a half 3.4 billion dollars worth of renewables but i know alan you get lots of other plans too yeah i mean thanks for the the question a lot of credit too goes to matthew who you know really built this business up um you know right now we've got as you can see from the slide over 1.5 gigs uh just It's under construction.

And a lot of that is with Meta, as you mentioned, also AT&T, Toyota and others. So real blue chip customers that we're really getting. And I think you can attribute that to the Enbridge brand, our size and scale at the end of the day. Also, on the safe Harvard side, we got about another call it one point five gigs of opportunity there, which gives us a lot of time as I think this tax credit thing gets sorted out. I do believe that and I've talked to a lot of others in the industry that have the same opinion that even once you move past the safe harbor opportunities, the safe harbor tax opportunities, that there are ways to make these projects economic without the tax credits, even in a tariff environment, because frankly, they're needed in order to to to meet the electricity demand that we have out there. that you're going to need renewables to supplement what's probably going to be mostly natural gas that's really going to end up doing most of the supplying a lot of that demand, but renewables are going to play a big part as well. And that's why we're so excited about this business and why it's a part of the portfolio.

Yeah, and it also speaks to that all of above strategy. So I appreciate your comments on the renewables, but let's not forget this company, Enbridge, since again, Investor Day, we are either constructing or have sanctioned 10.5 gigawatts of power infrastructure. And what I mean by that is you've got the renewable piece that we just talked about. But let's not forget at the utility. We're building the T15 line, which supports about 2.5 gigawatts of power in North Carolina. The SESH project we announced, AGT first round, Tennessee Ridgeline, which will come in at the end of the year, Line 31 in Louisiana, Vector, which we own 60 percent of, you know, those projects all told, those all account for 10 and a half gigawatts largely supporting power. So it's all of the above. People are less interested in what color your electrons are or your molecules. They need it from an affordability perspective, from an industrial growth perspective. And I think we're delivering on that with more to come.

Thank you so much and congrats on a great quarter. Thanks, Manav.

Your next question comes from the line of Maurice Choi with RBC Capital Markets. Maurice, your line is open. Please go ahead.

Thank you and good morning, everyone. I just wanted to come back to MLO2. It sounds like the Upstream project has been postponed for the time being, and I wonder if you could just dive a little bit deeper as to what has changed in recent months, whether it be a cost or a customer demand thing or other elements.

I don't think it's either one of those, but I think about, as I said, I mean, I think about this as the geopolitics of volatility and the psychology of sanctioning projects, right? So just think of the last six months, we've seen WTI go from $63 to $113, back to $69, then to $92, and in the last 30 days, it's gone from below $70 to above $90, back below $80. And now I think I've checked this morning, but a little over 80, $80. So, you know, in the straight-of-hand moves has gone from being an open to closed to maybe it's open to maybe 20 or 80% open. And then you've seen governments made pretty dramatic moves in terms of their policy stance, et cetera, and then thrown a little Venezuela there. So I think you can see there's a fair bit of a challenging backdrop for producers, refiners, exporters and pipelines to fully commit to large scale projects. But let's make no mistake, that is coming because the needs are there. Titus, look at the refineries. Refineries in North America are running at the high 90s. All this says they need more capacity. They're going to need more pipeline capacity. And then, of course, North American export. It's just until we get through that volatility piece, you know, people are going to be focused on give me customized solutions that I can utilize and I'll deal with the bigger solutions as we go forward. So, Colin, you might want to add to that.

Yeah, I think what's changed, I think just the pace of policy implementation is taking a little longer. it's all positive and like we said we've been advocating for it but it just does take a little time to get fleshed out and put into paper and and producers are behaving with discipline which which i respect i think they'll get there uh we were just a little too quick uh off the line here but uh we've we've started those conversations and and uh there's a lot of support for for mainline egress i think you're going to see more opportunities attached to this and think about the gulf coast too and the great thing is what are the two best places to be in north america when

you've got this environment it's uh it's the permian and the western canadian sedimentary basin and where is enbridge oil business right there serving pad two and pad three and 75 percent of the refining capacity in north america so yeah this this uh i don't think it's so much of a change as just getting, as Colin says, the gun to go off for the race and getting to the finish line.

So that makes sense. Thanks for the color. If I could just finish off with a question on the balance sheet. Pat, I think you mentioned that the debt to EBITDA is a little bit over five times, but after you adjust for FX, it will be within your target range. If I look at one of your slides in your pack where the $41 billion of secured capital program, I'm guessing about 40% of that is coming into service in 2027 with CapEx being spent today and the coming quarters. So I wonder if you could just give us a little bit of a trajectory as to how you think that the EBITDA metric will progress through the end of 2027.

Yeah, so I think we're pretty comfortable with our leverage levels, as you noted, 5-1 for the end of the quarter, but if you adjust for FX within that 4.5 to 5, um and you you're right in that we'll have actually a fair decent number of projects coming into service near the end of this year and then a big chunk of them kind of called the back half of next year and so i think we'll stay near the top of that range during that period of time but we're comfortable that with the levers we've got whether that be just cash flow we're generating whether that be we've got some hybrid capacity potential assets sales monetization things like that that we should be able to manage well within that range so we're we're excited to continue to build out this portfolio the other thing i'd say mentioned about that portfolio we've talked a lot about is that it's right down our fairway from a risk reward perspective and right in our core business which is which is fantastic so we feel really comfortable with the leverage that we've got and the tools we have to manage that as we go as those assets come into service in the back capital 27 presumably on a run rate basis you're probably in a lower to mid part of that four and a half to five times range yeah i mean i guess that partly will be uh uh determined by what other opportunities we secure in that window um you know if we start securing larger projects over next little while there probably won't be a lot of capital in 26 but there could be some capital in the back part of 27 so i'm not sure we'll be in the lower part but uh you know it should naturally come down as cash flows come on but that'll be a bit determined by the amount of capital that we see and the truth is we're seeing a lot of opportunities so we'll see how those evolve over the next little while but we're really comfortable that we can maintain that as we go forward it's great to hear thank you very much thank you your next question comes from the line of jeremy tonet with jp morgan jeremy your line is open please go ahead Hi, good morning.

Good morning, Jeremy. Just wanted to drill in a little bit, if we could, the $20 billion project sanctioning target for 2627. Already $9 billion in the bank, so a good portion there. But just was wondering, you know, a specific number there putting out this quarter. Just wondering if you might be able to dive in a little bit more on specifically, you know, the types of projects, you know, the areas. Is this largely NatGas logistics to service power, or are there other elements to this $20 billion target we should think about?

Yeah, well, it's a good question. And maybe the one slide I think that's in there is a good one to look at for investors, that number four slide, which, as you say, we've sanctioned $9 billion year to date, which is a great start to our kind of up to $20 billion through $27 billion. But if you look on that other chart, I would expect you're going to start to see more on the gas transmission side and obviously the liquid side, a good jump on renewables and gas distribution, maybe those a little bit ahead. But some of the projects on the gas side take a little bit longer. And yes, as Matthew talked about, Beacon is going to serve, yes, customers up there, but important for power producers up there. He may have mentioned, but I think we've said to folks, even the governor of Massachusetts suggested power, independent power producers sign up for projects like Enbridge's. So and then in the southeast, you'll see opportunities down there, as you know, a lot of growth in that neck of the woods tied to power, but also just industrial growth and data centers. So it's right across the whole board. But I would expect to see a significant portion of the go forward coming on the gas side to serve not just power, not just LNG, not just storage, but also industrial onshoring. So it's all of the above opportunity for gas. I don't know, Matthew, whether you want to add to that.

Yeah, sure. Thanks, Jeremy. It is a very exciting time for the gas transmission business. And I mean, as you know, I mean, Enbridge, we don't announce projects until they're fully baked, but there's a lot of activity going on across our entire footprint. and it isn't you know some of it is is power but not necessarily data center power a lot of it is within utility footprints and those are you know our some of our favorite customers is the big regulated utilities I mean when you look at what's happening across our footprint Greg did mention the southeast and you look at what's happening in Florida for example and we've got big interest in two out of three pipes there we talked about the northeast Texas eastern across the entire Gulf Coast. So we do see it across all pieces. We do expect to punch above our weight in gas transmission. Some of that could be chunky, of course, because some of the projects, as Greg said, it'll depend on the customer timing, but very active conversations going on. And we're optimistic that we're going to be contributing more than our fair share over the next six to 12 months in gas transmission. So great outlook there.

And Michelle, I don't want to, sometimes I think we forget the distribution company and just how much its rate base is growing serving all those but you want to speak to that particular in the u.s sure you know i mean we're very happy with the the u.s utilities and we uh have been very pleased with the growth that we're seeing out of them in fact we're forecasting well above eight percent growth rate based growth in the utilities and that's ranging anywhere from from five percent plus in ohio where we really saw it as more of just a stability kind of market. Now we're seeing a lot of growth tied to data centers and things like that, all the way up to 19% in North Carolina. We've talked about a few of the big projects like our Mariah Energy Center, a T-15 project to serve Duke and coal to gas conversions. But just like Greg alluded to, we're seeing industrial reshoring, manufacturing growth, residential growth has remained strong across the board. And I can't pass over Utah as well, where we see about 8% rate-based growth. And that's where we've already connected to several data centers.

So good. As you can see, Jeremy, right across and definitely gas, a big focus. And we've already talked about liquids and renewables.

Very helpful. And then just a smaller detail question for myself. I was wondering, is it related to Blackcomb when you say it's commissioning now? Does that mean it's like blowing a quarter of the gas and it will be full by year end? Or how should we think about that ramp?

Yeah, I think that's probably fair. We can get back to you on the details on that, Jeremy. But yeah, it's just ramping up now through year end.

Yeah, as you know, as we introduce gas, you want to make sure things are running right, compression right. Yeah, it's just the general ramp up. You'll be at full tilt, I think, by end of the year, Matthew. you. As we know, there's plenty of gas to move out of the Permian and that we saw that coming and that's going to continue to be the case here. So yeah, I would argue the second these things are fully turned on, they're full. And so really what it's going to speak to it. So ask us that question as we get to the end of the year, how full it is. And I think the response will be full and hence, here's what else we've got going on.

Got it. That makes sense. Thank you. Thanks, Jeremy.

Your next question comes from the line of Robert Cattellier with CIBC Capital Markets. Robert, your line is open. Please go ahead.

Hey, good morning, everyone. I just wanted to go back to the WCSB and the Liquids Outlook, understanding that there's still a lot of work on the policy side, but it does feel like we're going to get to a place that will promote production growth so in that context we're likely going to need additional condensate so i was wondering if you could speak to the outlook for your condensate tools there and specifically southern lights what you know what type of ability you have to expand capacity there both with and without looping yep robert great great call out and And indeed, as the basin grows by a million to three, four million barrels a day, which is the ambition, it's quite a game changer here.

So diluent will be needed to enable that. You're acutely on it. And the good news is Enbridge has a full value chain to import condensate on Southern Lights and Norlite. And there is a meaningful headroom on both those assets, you know, prior to looping, right? So we'll commercialize those and even look at other solutions, you know, to come in behind that in a batting order kind of context. So we've got a full strategic playbook for that as well. And we're a leader in that space. Okay.

And then maybe a question for Michelle here related to Ohio. Obviously, there was a very good support from the staff on your rate case, but I can't help but notice there was also some legislation table suggesting a utility rate freeze for a year. so maybe you could walk through that in your your regulatory strategy in ohio to to address that it just seems a little bit reminiscent of um enbridge gas new brother yeah you bet uh so uh first of all you're right they will receive the staff report at the beginning of july and we're very pleased with uh with uh their position it's constructive we're going to enter into settlement discussions here there is a hearing scheduled for the end of september but we're pretty optimistic

that we can land in a good place on settlement the particular legislation you're referring to it was when we had a look at it I mean it's I think it's it's very indicative of folks concern around affordability and I'll touch on that in a second the legislation itself the way it was brought forward it missed some particularly relevant deadlines in order to be able to get through so we don't see it as a specific threat but I do think we need to stay very focused on the affordability side of things whether that's in Ohio or any of our jurisdictions in Ohio we are we are the lowest cost to serve as we've talked about many times I mean next to the the three other LDCs we're anywhere between 40 and 70 percent lower especially once you've included the the commodity cost because we've invested so much in making sure they have access to the commodity but as Enbridge gas writ large we're really looking at and and Greg alluded to this earlier, how can we leverage our scale, our size, our buying power to continue to drive affordability for our customers? There's no question. We've done some polling across our franchise areas, both in Canada and the US. And the residents of those regions describe themselves not just as frustrated, but angry about the cost of things. 80% plus are angry about the cost of things. So it's on us as utilities that are in service to our communities to focus on that. And it's also through things we've talked about. And I think at the last during the call, we talked about our investment in storage as an example. Ontario's storage this winter saved our customers, the fact of that storage, $200 million. In Ohio, it saved them $100 million in avoided costs because they didn't have to buy at the peak of the season. So we're extremely focused on that and even in the regions where we're growing like north carolina we really believe in that principle of growth financing growth and we're seeing that so i don't mean to be in any way shape or form dismissive of that legislation but that particular piece we don't see it uh gaining traction but the overall affordability concerns that we're seeing is definitely something we're focused on yeah there's a lot more to affordability than just that piece of legislation thank you thanks rob your next question comes from the line of aaron mcneil with td cowan aaron your line is open please go ahead hey morning all thanks for

taking my questions i wanted to follow up on rob's question on um southern lights can you give us a sense of sort of the range or quantum of different capacities you could potentially bring on with an expansion and what would the potential timelines be for for those range of solutions to come into service yeah we have like i said we have headroom on on both those pipes and uh you know without twinning so this is just uh compression or pumping so um like the rest of the playbook we intend to bring that on you know in in pieces as as needed um you'll see in our disclosures here we've recently moved southern lights from a kind of a cost of service model to a contract model uh you know with an upward kind of tilted return if i could borrow a term from the past and, you know, inflators, and we'll bring on capacity as needed. Likewise on Norlite, and we'll work with our partner on that. That often folds, the delimant conversation often folds into the regional kind of gathering conversation with shippers. They often want to procure both those solutions together, and we can bundle those packages for them if that's kind of helpful in the commercialization outlook.

But in fairness, it kind of goes back to the other issues we've talked about. I mean, production is going to drive when that comes out. So as we see greater clarity on policy, legislation, actual implementation, and then our customers taking decisions on actual investments in production growth, that'll drive that. So we're not trying to push off your questionnaire, and I think that that's the next milestone to watch for.

I guess what I'm trying to get at is, you know, if you think that domestic production can't keep up with sort of the demand, like, do you think Enbridge will be able to deliver that condensate that the industry needs under sort of the range of potential outcomes here?

Like, how do we think about that? Yes and yes. Yeah, domestic supply will be insufficient, as this ambition is realized, and there's a number of parties leaning into this ambition now. So domestic supply condensate will be insufficient, and we'll need to import more. And we even beyond that, we think there, like I alluded to earlier, there will be additional import solutions required. Like, if you recall back to Northern Gateway, 12 years ago, we had contemplated a companion Dillywood import money. So we've been thinking about this equation and problem for a long time.

And then maybe just one more.

As it relates to the standalone Flanagan South and Southern Access extension opportunities, are you at a stage where you can better quantify either the improved initial economics as you referred to it or the capital scope of those projects uh not not quite yet we'll reserve that for uh an fid disclosure but it is uh it is significant it's not as big as mlo2 to be fair but uh the capital i mean but uh the return uh output is is disproportionately attractive okay Thanks.

I'll turn it back. Thanks, Aaron.

Your next question comes from the line of Sam Burwell with Jefferies. Sam, your line is open. Please go ahead.

Hey, guys. Good morning. Thanks for squeezing me in at the end.

One more on MLO2.

I mean, should we assume a very short time lag between these downstream expansions and then ultimately an upstream expansion of the main line and just like is the expiration of the mainline polling settlement any consideration in this in terms of when you would want to push through the mainline expansion tbd i mean it could be any of those honestly um but i think you you surface an important distinction which is i mean does it have to be the exact same scope as mlo2 as the solution it does not it could be a different version of it.

We have lots of MLOs designed. You know, we can manage in the interim with that imbalance. But to another point, we could also scope into the next line negotiation, a capital expansion. Anything's possible here. And I think to Greg's point earlier, we have a number of solutions will remain agile we want to be kind of customer led on this and there there will be a solution uh you know at some point it's not a question of uh of if it's when the main line will most probably be be expanded for 136th time at some point like yeah and we may have a label for it we may not have a label for it maybe there's a digital solution there's there's uh there's There's a lot of – there's seven pipelines in the right-of-way, 36-inch, 48-inch. There's potential to cross over pipe. There's all kinds of solutions here. So I just ask everyone to remain kind of patient and agile here, and we'll continue to serve the basin.

Yeah, and let's not forget we're adding 180,000 barrels a day with our MLO-1 and the SICK project, which I believe is the only FIDD grass out of the basin in a decade. And let's not forget the further south as well. You know, our producers are always looking for how else can they get to market. And, you know, yes, Mainline and the market-facing pipes, but we also have Ingleside as well, too. So, you know, if you can find a way to get producers to different markets, and they're not just price takers, we're looking at that, too. So I think all of this is tied up back into that whole geopolitical volatility and the psychology of sanctioning projects, which I think is a winner for the Enbridge's of the world when you have multiple different... I know you used to speak about it as a Swiss army knife, but we actually have several Swiss army knives as it's turning out, whether it's on the north or the south of liquid side, on the gas side, and even the distribution side as well now, too. So, yeah, stay tuned, Sam.

Can I just offer a more point? Supply push here quite a bit on this kind of threat on egress. And one of the ahas, I think, you know, the markets observing through this Iranian conflict and Hormuz bottleneck is product on the demand side.

Yeah.

So product shortages globally, refineries, which were plumbed to 75 percent of the U.S. refining capacity. Refineries are being pushed really hard to supply that product, not just for the U.S., but globally. and uh it's it's our you know emerging belief that the u.s refining kit is likely to re-rate upwards and so that that is a that is a positive uh i think emergence in this supply demand equation on the colonel yeah it's a good color you take five or six million barrels a day of refining capacity out through hormones and then the russian situation which people thought But that war was going to last for weeks, and it's now lasted longer than World War I.

And that stuff may not come back very fast. And even when it does, yeah, North American refining capacities got an opportunity to be out of the fray, if you will, and have a great basins, multiple great basins to pull So, yeah, I think that that macro backdrop is excellent as well.

For sure. Thanks for the extra color, guys.

Thanks, Sam.

Your next question comes from the line of Benjamin Pham with BMO. Benjamin, your line is open. Please go ahead.

Hi, thanks. Good morning. You mentioned the favorable recontracting environment, especially on the gas side, and you have a number of projects here moving forward to what we've been seeing, better returns. How do you think your return, or how does that actually look at the return profile on existing assets? the trend returns where it's going and then just in that 20 billion of opportunity does that effectively fill up your white space through the end of the decade because from what we can quickly see it it seems like it does fill up a big chunk of it yeah i think that's that's fair on on recontracted projects well again you're looking and i think s&p just up updated their gas demand outlook for North America right through 2040 that moved it up significantly.

So infrastructure is still hard to build. So whenever we go to recontracting, you know, the rates are as good, if not better. You know, Texas Eastern, the kind of granddaddy of the U.S. pipelines we have, we always have 100 percent recontracting. I think once in the last 10 years, I've seen us go down to 99 and we sold that additional percent at a boatload. So So even like capacity, getting people to resign is not an issue. And when we can do it for better returns. And you see that on storage, Ben. Like our storage returns have gone up quite nicely in the last four, three, four years. And anything that comes up for an ill now, we're seeing higher rates on that than what we would originally contracted for. Now, with respect to your filling up to the end of the decade, yeah, we'll see. I mean, and again, that we expect to FID through 27, 26 and 27 up to the 20 billion. The opportunity set is more like 50 billion. So, yeah, that's what gives us confidence in that 5% growth through the end of the decade. So I don't think we're going to be lack of opportunity.

It's going to be which ones provide the best returns for our shareholders and the best results for our customers. um and there's not too much white space left to fill i would totally agree with that yeah maybe i just add then a couple things one is yeah we talk a lot on these calls about new opportunities and that's positive we want to talk about all those but you should definitely be focused on the fact that management is always focused on optimizing the returns of our base assets whether that's michelle getting the returns we need on the renew on the uh um utilities whether that's the renewals of various uh rate cases that we have so it's a big focus to continue and in a market where our assets are required and needed I think we're in a good position when that happens on the white space question I think it's fair to say that remember as we add EBITDA to the business our capacity also goes up you've seen us move from I think maybe three four years ago of seven or eight billion of capital in a year now we're up to 10 to 11 if we put the right projects in at the right returns on budget on time that will continue to increase which will continue to you know almost increase that white space that we have and that we look to fill into the back part of the decade so 26 and 27 are pretty full up from a capital perspective and and to be frank the amounts that we uh the projects that we're gonna uh fid over next little while probably have spent maybe some in 27 but then 28 29 and the goal here is to continue that clarity into that growth and

extend it further on so uh we feel very good about the about the growth and the base assets Can you update us on your T-NORP T-SELF outlook and just in the context of rising production? I'm not sure it's totally related to you specifically. Is Fortis announced this expansion of the tilloway facility and marine bunkering? And maybe there's an expansion on wood fiber around the corner. So I'm just curious, any change, and I appreciate the Sunrise's going on in construction, but I wouldn't love to update the Notebook.

Yeah, thanks, Ben. It's Matthew. So that's another positive area we haven't mentioned, so I appreciate you raising it. And as you did recognize, we just started construction and just broke ground on the $4 billion Sunrise Expansion project there, which is a great project. What we're seeing generally on a macro basis, you know, beyond that and around that is just renewed support at a level we haven't seen in a long time for natural gas across Canada and, of course, in British Columbia, and also a drive to export more gas off the coast of British Columbia, which we're really well positioned for, whether that's expansions on, as you mentioned, T North and T South. Or as you probably are aware, we have a fully permitted LNG pipeline in British Columbia. So, you know, with the right commercial construct and the right returns, and we're seeing tremendous commercial, renewed commercial interest in that. And as I said, stakeholder support for that. There's more possibility of that kind of attractive project in Western Canada as well. So, yeah, we're seeing definitely an upswing in the opportunity set there.

Hey, Ben, just to add, don't forget, we're also adding a big expansion on our Aiken Creek storage, the only storage facility that exists in British Columbia. And as that gets contracted up, seeing very positive upside there as well. So I think beyond what Matthew said, I think we're actually at eight billion dollars of projects. And if you look down the West Coast, there's only one pipeline that goes north, south all the way. And that's us. And then last but not least, particularly in the current environment in Canada, we have thought about this a long time and we're on it early in British Columbia. We have some 38 nations that own a piece of that West Coast pipeline, and that ability to involve Indigenous and private sector projects is a really critical component in British Columbia, and we've already got that set up. So, yeah, BC is great. I'd like better returns there, but that's up for our regulatory folks to figure that one out.

Okay, got it. Good context. Thank you.

Thanks, Ben. this concludes the q a session i will now turn the call back to marlon samuel for closing remarks great uh thank you and we appreciate your ongoing interest in enbridge as always our investor relations team is available following the call for any additional questions that you may have once again thank you and have a great day this concludes today's call thank you for attending.

You may now disconnect.