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Enbridge (ENB) to Supply Natural Gas to Plaquemines Facility

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·4-min read
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Enbridge Inc. ENB announced that it would proceed with the construction of two pipeline projects to supply natural gas to Venture Global’s proposed Plaquemines liquefied Natural Gas (“LNG”) facility in Louisiana.

Enbridge seeks to provide a natural gas transportation capacity of 1.5 billion cubic feet per day through its two Texas Eastern Transmission LP projects — the Venice Extension and Gator Express Meter.

The Gator Express Meter project is expected to be operational in 2023, while Venice Extension is anticipated to be in service in 2024. Estimated costs for the projects are $400 million, supported by long-term contracts.

The latest announcement builds on Venture Global’s final investment decision (FID) to develop the $13.2-billion Plaquemines project. It is the first U.S. LNG project to reach FID, almost three years after Venture Global’s Calcasieu Pass had its financial close.

Venture Global’s decision came as natural gas prices and LNG demand skyrocketed worldwide amid concerns over global energy security and the Russia-Ukraine conflict.

Enbridge currently serves four operating LNG facilities on the U.S. Gulf Coast. Plaquemines will be the fifth LNG facility in the region served by Enbridge. Once fully developed, it will have an export capacity of up to 20 million metric tons of LNG per year.

Enbridge’s Texas Eastern system is ideally positioned to supply rising North American LNG exports to meet society’s energy security and climate goals. The company secured projects to serve two additional proposed facilities, Rio Grande and Texas LNG.

Company Profile & Price Performance

Headquartered in Calgary, Alberta, Enbridge is a leading energy infrastructure company.

Shares of Enbridge have underperformed the industry in the past six months. The stock has gained 23.9% compared with the industry’s 24.7% growth.

 

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Zacks Rank & Stocks to Consider

Enbridge currently carries a Zack Rank #3 (Hold).

Investors interested in the energy sector might look at the following companies that presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Continental Resources, Inc. CLR is an explorer and producer of oil and natural gas. CLR expects to generate positive free cash flows for the seven consecutive years in 2022.

Continental has a strong focus on returning capital to shareholders. CLR’s board of directors announced a quarterly dividend payment of 28 cents per share, which increased 21.7% from 23 cents per share in the previous quarter. The amount will be paid out on May 23, 2022, to stockholders of record as of May 9, 2022. The company also increased its existing share repurchase program to $1.5 billion.

EQT Corporation EQT is a pure-play Appalachian explorer, which is one of the largest natural gas producers in the United States. The upstream energy player has lower exposure to debt capital than composite stocks belonging to the industry. Hence, EQT can rely on its strong balance sheet to sail through the volatility in commodity prices.

For 2022, EQT expects total sales volumes of 1,950-2,050 Bcfe, indicating an improvement from the 2021-end level of 1,857.8 Bcfe. Also, it expects a free cash flow of $1.4-$1.75 billion, suggesting an increase from $934.7 million reported last year.

TotalEnergies SE TTE has one of the best production growth profiles among the oil super majors. TTE expects second-quarter 2022 hydrocarbon production to improve, driven by start-ups in Brazil, offset by sales of mature assets completed in 2021. It is also working on expanding the LNG portfolio globally.

TotalEnergies is managing long-term debt quite efficiently and trying to keep the same at manageable levels. Its debt to capital has been declining over the past few years. Net debt to capital was 12.5% at the end of first-quarter 2022, down from 23.7% at the end of first-quarter 2021. As of Mar 31, 2022, cash and cash equivalents were $31,276 million. This was enough to address the current borrowings of $16,759 million as of Mar 31, 2022.


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