Canada's Enbridge Expects Adjusted Profit to Rise on Spectra Deal

Enbridge Inc , Canada's largest pipeline company, said on Thursday it may acquire more assets and forecast a rise in adjusted earnings before interest and taxes this year following its purchase of Spectra Energy Corp.

Enbridge (ENB) said last September it would buy Spectra, a smaller rival then valued at $28 billion, to create the largest energy infrastructure company in North America.

The deal, which closed on Feb. 27, highlighted the pressure on pipeline companies to merge as they grapple with over-capacity and sliding tariffs.

Calgary, Alberta-based Enbridge, which reported a lower-than-expected profit on Thursday, said it expects adjusted profit before interest and taxes of C$7.2 billion ($5.25 billion) to C$7.6 billion in 2017, much higher than the C$4.7 billion it earned last year.

Enbridge Chief Executive Al Monaco said on a conference call that the company could make new acquisitions, although it will focus on its investments in the European offshore business for now.

"We can obviously prefer organic opportunities first, but we won't be afraid to pursue asset deals, in particular, to fill-in the strategy," he said.

Monaco also said Enbridge may restructure to deal with the new assets from its Spectra acquisition to reduce leverage.

Construction for Enbridge's Line 3 pipeline project from Alberta to Superior, Wisconsin, will continue regardless of a legal challenge in the province of Manitoba, Monaco said. He predicted the legal challenge would be over by the time construction reached that Western Canadian province.

Enbridge on Thursday said it expects available cash flow from operations to fall to C$3.60 to C$3.90 per share this year, from C$4.08 per share in 2016.

Weak earnings from Enbridge's liquids pipeline business weighed on profit in the first quarter ended March 31. Adjusted earnings in the unit fell 10 percent to C$970 million in the period.

Net earnings attributable to shareholders fell 47 percent to C$638 million, or 54 Canadian cents per share.

Excluding a C$416 million derivative gain and other one-time items, adjusted profit was 57 Canadian cents. The analysts' average estimate was 62 Canadian cents, according to Thomson Reuters I/B/E/S.

Reporting by Swetha Gopinath and Ethan Lou