Michael Sprung Top Picks BNN Market Call – Feburary 21, 2018

TOP PICKS:

Bank of Nova Scotia, BNS-T, Owned by clients and personally, Last Purchase September 16, 2016 $69.85
The Bank of Nova Scotia is the most international of the Canadian banks with branches in the Caribbean, Central and South America. Loan growth in the Latin American markets has been robust. While exposed to Mexico (6% of profits), the future of NAFTA could be of some concern but to date there has not been any apparent deterioration in credit quality. Overall, we anticipate that International and Canadian Banking results will demonstrate positive trends when BNS reports results on February 27. The current yield of 4.1% is attractive as are the relative valuation parameters to its peers.

Michael Sprung’s Top Picks – BNN Market Call, Feb. 21, 2018

BCE Inc., BCE-T, Owned personally and by clients, Last purchase February 13, 2018 $56.24
BCE Inc. is Canada’s largest communications company. The company’s dominant infrastructure build provides some competitive advantage over its primary competitors. However, changes in technology and the competitive landscape will require large ongoing capital outlays. In the wireline business, BCE is leading in its quest to bring fibre to the home that will provide superior internet and related services. The wireless busines remains competitive promotions are expected to continue but BCE retains the largest market share. The media business remains challenging. In the current environment, we antcipate that BCE will more than hold its own position in the competitive landscape and the current yield of 5.1% is attractive given the likelyhood of future dividend increases.

Enbridge Inc., ENB-T, Owned by clients, Last Purchase November 16, 2017 $44.72
Enbridge Inc. is a leading energy generation, distribution and transportation company in the US and Canada. Its pipeline network includes the Canadian Mainline system, regional oil sands pipelines and natural gas pipelines.

The company also owns and operates a regulated natural gas utility and Canada’s largest natural gas distribution company. Additionally, Enbridge generates renewable and alternative energy with 2,000 megawatts of capacity. While rising interest rates and concerns about funding have constrained stock performance recently, free cash flow and an objective of raising the dividend by by 10% annually through 2020 will be reflected in future share performance. Enbridge has a project backlog of $22 billion that will benefit future cash flows. Non-core asset sales of a $3 billion this year and a further $7 billion later will be supportive of their capital plan . The recent pullback in the share price has resulted in a current attractive yield of 6.2%

Outlook:

In the last month, we have witnessed the return of some volatility in the global stock markets. While valuations have corrcted somewhat, They are still above their longer term norms. To date, there have not been any notable downward revisions in global economic growth over 2018. However, ten years is an exceedingly long time for an economic expansion to continue without a slowdown or recession. During any expansion, there are always elements in the economy that accumulate until things come to a breaking point.

All of the same geopolitical concerns stemming from Washington, North Korea, the Middle East and elsewhere remain. NAFTA negotiations drag forward with little progress in eveidence.

All of these factors lead us to continue exercising caution and prudence in the current environment.

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Enbridge (TSE:ENB) partners with NDT Global to enhance pipeline safety

Pipeline operator Enbridge Inc (TSE:ENB, Mkt cap 92.27B, P/E 28.31, Div/yield 0.58/4.16, EPS 1.98, Shares 1.63B) has launched new research aimed at improving pipeline inspection technology.

Enbridge Inc TSE:ENB Spectra Energy merger approved

Enbridge (TSE:ENB) partners with NDT Global to enhance pipeline safety

The company said on Tuesday that it has formed a multi-year research and development project with NDT Global, a supplier of ultrasonic pipeline inspection and pipeline integrity management. Together, the two companies plan to develop a new generation of inspection tool that will enhance pipeline safety and reliability.

Enbridge and NDT Global have already been working together for 15 years on pipeline inspections, using high resolution ultrasonic technology for advanced crack assessment.

The new inspection tool is expected to improve the crack assessment process even further.

"At Enbridge, we are continually looking for opportunities to enhance existing technologies, and progress new ones, in the areas of design, construction, operation and maintenance, to keep our pipelines safe," commented Walter Kresic, vice president of pipeline integrity at Enbridge Pipelines Inc. "We believe this next generation project with NDT Global will build on the industry leading tools and technology we already use, and further enhance our ability to inspect, monitor and prioritize cracking threats in pipelines."

Mario Lemme, CEO of NDT Global, said that the company's long-term ambition is to eliminate pipeline failure which results from pipe integrity defects.

"Achieving this requires collaboration in long-term research and development projects," Lemme explained. "We are delighted to collaborate closely with Enbridge on this initiative, which offers a real opportunity to make a breakthrough in crack assessment capability."

As part of the research and development program, the new tool will be tested on Enbridge's pipelines in Canada and the United States.

Enbridge Inc (TSE:ENB) is a Calgary-based energy transportation and distribution company. The Company operates in five segments: Liquids Pipelines; Gas Distribution; Gas Pipelines, Processing and Energy Services; Sponsored Investments, and Corporate. Liquids Pipelines segment owns and operates crude oil and other liquid hydrocarbons pipelines and terminals. Gas Distribution consists of the Company's natural gas utility operations. Gas Pipelines, Processing and Energy Services segment consists of investments in natural gas pipelines, gathering and processing facilities and the Company's energy services businesses, along with renewable energy and transmission facilities. Sponsored Investments includes the Company's 33.7% economic interest in Enbridge Energy Partners, L.P. (EEP), and Enbridge's interests in both the Eastern Access and Lakehead System Mainline expansion projects held through Enbridge Energy, Limited Partnership (EELP). The Corporate segment includes an investment in Noverco Inc. More from Reuters »

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Merger of Enbridge (TSE:ENB) and Spectra Energy gets green light from FTC

The U.S. Federal Trade Commission (FTC) has approved the proposed merger of pipeline companies Enbridge Inc (TSE:ENB, Mkt cap 51.91B, P/E 28.03, Div/yield 0.58/4.20, EPS 1.98, Shares 943.19M) and Spectra Energy Corp.

To secure the regulator's approval, the two companies agreed to certain actions designed to address concerns that the tie-up would harm competition in the market for pipeline transportation of natural gas in three production areas in the Gulf of Mexico.

Enbridge Inc TSE:ENB Spectra Energy merger approved

Merger of Enbridge (TSE:ENB) and Spectra Energy gets green light from FTC

The FTC had claimed that the $28bn merger was likely to reduce natural gas pipeline competition in Green Canyon, Walker Ridge and Keathley Canyon, leading to higher prices for natural gas pipeline transportation from those areas. In parts of the affected areas, the FTC said that the two companies' pipelines are the two located closest to certain wells and, as a result, are likely the lowest cost pipeline transportation options for those wells. Under the settlement with the FTC, the companies agreed to conditions that will preserve competition in those areas.

Competition concerns were raised because Canada-based Enbridge is the sole owner and operator of the Walker Ridge Pipeline, while Houston-based Spectra — through its indirect stake in DCP Midstream Partners — indirectly owns a 40% interest in the Discovery Pipeline.

The proposed merger will give Enbridge an ownership interest in both pipelines, providing "access to competitively sensitive information of the Discovery Pipeline, as well as significant voting rights over the Discovery Pipeline," the FTC pointed out.

"Access to its competitor's competitively sensitive information and significant voting rights would provide Enbridge with the incentive and opportunity to unilaterally increase pipeline transportation costs for natural gas producers located in the affected areas. The exchange of information also may increase the likelihood of tacit or explicit anticompetitive coordination between the Walker Ridge Pipeline and the Discovery Pipeline."

To address this issue, Enbridge and Spectra Energy have agreed, following the close of their merger, to enact firewalls governing the flow of certain information to Enbridge about the Discovery natural gas pipeline system, and to take certain other steps limiting Enbridge's potential influence over actions related to Discovery.

With this clearance from the FTC, the final regulatory requirement for closing is clearance under the Canadian Competition Act.

Enbridge and Spectra expect the merger to be completed before the end of the first quarter of 2017.

Enbridge Inc (TSE:ENB) is a Calgary-based energy transportation and distribution company. The Company operates in five segments: Liquids Pipelines; Gas Distribution; Gas Pipelines, Processing and Energy Services; Sponsored Investments, and Corporate. Liquids Pipelines segment owns and operates crude oil and other liquid hydrocarbons pipelines and terminals. Gas Distribution consists of the Company's natural gas utility operations. Gas Pipelines, Processing and Energy Services segment consists of investments in natural gas pipelines, gathering and processing facilities and the Company's energy services businesses, along with renewable energy and transmission facilities. Sponsored Investments includes the Company's 33.7% economic interest in Enbridge Energy Partners, L.P. (EEP), and Enbridge's interests in both the Eastern Access and Lakehead System Mainline expansion projects held through Enbridge Energy, Limited Partnership (EELP). The Corporate segment includes an investment in Noverco Inc. More from Reuters »

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The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

Enbridge Inc’s (TSE:ENB) Ozark Pipeline to be acquired by MPLX subsidiary

Energy infrastructure company MPLX LP (NYSE:MPLX) revealed on Monday that its MPLX Pipe Line Holdings LLC subsidiary will acquire the Enbridge Ozark Pipeline.  Enbridge Inc (TSE:ENB, Mkt cap 53.15B, P/E 27.76, Div/yield 0.58/4.13, EPS 2.03, Shares 943.19M)

Enbridge Inc TSE:ENB Ozark Pipeline acquired MPLX subsidiary

Enbridge Inc’s (TSE:ENB) Ozark Pipeline to be acquired by MPLX subsidiary

​An affiliate of MPLH will purchase the pipeline for approximately $220m under an asset purchase agreement with Enbridge Pipelines (Ozark) LLC.

The Ozark pipeline is a 433-mile, 22-inch crude oil pipeline which extends from Cushing, Oklahoma, to Wood River, Illinois. It has the capacity to transport approximately 230,000 barrels per day (bpd).

A planned expansion of the pipeline will increase its capacity to approximately 345,000 bpd by increasing horsepower at pump stations along the pipeline and adding drag-reducing agents to the crude oil.

An open season recently conducted by Enbridge Pipelines (Ozark) LLC received sufficient long-term volume commitments to plan the expansion, which is expected to be in commercial service by the second quarter of 2018.

Commenting on the acquisition, Don Templin, president of MPLX, said: "We believe MPLX is extremely well-positioned to grow through a combination of organic projects, dropdowns from our sponsor Marathon Petroleum Corporation, and third-party acquisitions. Ozark Pipeline will expand the footprint of our logistics and storage segment by connecting Cushing-sourced volumes to our extensive Midwest pipeline network."

The purchase transaction remains subject to customary closing conditions, including regulatory approvals. It is expected to close in the first quarter of 2017.

MPLX is a master limited partnership which was formed in 2012 by Marathon Petroleum Corporation to own, operate, develop and acquire midstream energy infrastructure assets.

Enbridge Inc (TSE:ENB) is a Calgary-based energy transportation and distribution company. The Company operates in five segments: Liquids Pipelines; Gas Distribution; Gas Pipelines, Processing and Energy Services; Sponsored Investments, and Corporate. Liquids Pipelines segment owns and operates crude oil and other liquid hydrocarbons pipelines and terminals. Gas Distribution consists of the Company's natural gas utility operations. Gas Pipelines, Processing and Energy Services segment consists of investments in natural gas pipelines, gathering and processing facilities and the Company's energy services businesses, along with renewable energy and transmission facilities. Sponsored Investments includes the Company's 33.7% economic interest in Enbridge Energy Partners, L.P. (EEP), and Enbridge's interests in both the Eastern Access and Lakehead System Mainline expansion projects held through Enbridge Energy, Limited Partnership (EELP). The Corporate segment includes an investment in Noverco Inc. More from Reuters »

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The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.

 

Enbridge Inc (TSE:ENB) announces plan to take Midcoast Energy Partners private

Enbridge Inc (TSE:ENB, Mkt cap 51.74B, P/E 27.41, Div/yield 0.58/4.19, EPS 2.03, Shares 943.11M) will pay about US$170m to take private Midcoast Energy Partners LP (MEP), the Calgary-based pipeline company said on Friday.

MEP has a stake in the natural gas gathering and processing business owned by Enbridge Energy Partners LP (EEP).

TSE:ENB Enbridge Midcoast Energy Partners private

Enbridge Inc (TSE:ENB) announces plan to take Midcoast Energy Partners private

According to MEP, Enbridge will acquire all of its outstanding publicly-held common units for US$8.00 per unit — a 5.5% premium to the trailing 30 trading-day volume weighted average price of MEP common units as of January 26, 2017.

John Whelen, executive vice president and chief financial officer of Enbridge, commented: "We believe it is in the interest of all shareholders that these assets be held privately within the Enbridge family of companies at this time. Eliminating a publicly traded vehicle also reduces costs and simplifies our corporate structure."

The transaction is expected to close in the second quarter of 2017.

Meanwhile, a strategic review of EEP is ongoing and is expected to continue through the second quarter.

Whelen said that "EEP has highlighted certain initial joint funding actions with Enbridge and further actions under consideration as part of the strategic review. The initial actions announced today and any further actions that may be undertaken in connection with the EEP review are not expected to be material to Enbridge's previously published financial projections. Enbridge is not planning a buy-in of EEP at this time. It is expected that EEP will remain as a publicly traded limited partnership and not be combined with any other entity in connection with the strategic review."

Enbridge pledged to continue working closely with EEP on the strategic review.

Whelen concluded: "While EEP's gas gathering and processing has been impacted by the prolonged commodity downturn, its core liquids pipeline business on the whole is performing very well and in line with our expectations, financially and operationally. In particular, Enbridge's Mainline performance remains at record levels. Both Enbridge shareholders and EEP unitholders will continue to derive value from these unique and critical infrastructure assets in the near-term and in the years to come."
 

Enbridge Inc (TSE:ENB) is a Calgary-based energy transportation and distribution company. The Company operates in five segments: Liquids Pipelines; Gas Distribution; Gas Pipelines, Processing and Energy Services; Sponsored Investments, and Corporate. Liquids Pipelines segment owns and operates crude oil and other liquid hydrocarbons pipelines and terminals. Gas Distribution consists of the Company's natural gas utility operations. Gas Pipelines, Processing and Energy Services segment consists of investments in natural gas pipelines, gathering and processing facilities and the Company's energy services businesses, along with renewable energy and transmission facilities. Sponsored Investments includes the Company's 33.7% economic interest in Enbridge Energy Partners, L.P. (EEP), and Enbridge's interests in both the Eastern Access and Lakehead System Mainline expansion projects held through Enbridge Energy, Limited Partnership (EELP). The Corporate segment includes an investment in Noverco Inc. More from Reuters »

How Did Your Advisor Choose the Mutual Funds You Own? Read here>>

Download Our Free Special Report – How to Hunt For Value Stocks. Michael Sprung will share with you 5 stocks set for long-term gains here>>

We believe that investment management is about managing risk, not chasing speculative returns. Like to learn more? Please contact us here>>

The opinions expressed here are ours alone. They are provided for information purposes only and are not tailored to the needs of any particular individual or company, are not an endorsement, recommendation, or sponsorship of any entity or security, and do not constitute investment advice. We strongly recommend that you seek advice from a qualified investment advisor before making any investment decision.