Petrochemical storage tanks are seen at the Enbridge Edmonton Terminal, near Edmonton, on Oct. 7, 2021.TODD KOROL/Reuters
Canadian pipeline giant Enbridge Inc. ENB-T is planning to cut 650 jobs across the company to help rein in spending.
The move comes less than five months after the Calgary-based company became North America’s largest natural gas utility by acquiring three U.S. utilities for US$9.4-billion – a deal that chief executive Greg Ebel branded a “generational opportunity.”
Enbridge said in an e-mail Tuesday that while the company delivered a strong financial performance in 2023, “cost reduction measures are necessary to maintain our financial strength, be more cost competitive and enable us to grow.”
Higher interest rates, economic uncertainty and the ripple effects of various geopolitical developments have combined to create increasingly challenging business conditions across many industries, Enbridge said.
Reducing operating costs and strengthening its competitiveness will enable Enbridge to “weather near-term challenges,” the company said.
Enbridge said it will first look at reducing vacancies, contract positions and redeploying current workers where possible, before layoffs.
It called the work force reduction a “difficult, yet necessary, decision” and said the move would not affect safety at its operations.
In November, Enbridge announced it was raising its quarterly dividend payable on March 1, 2024, to 91.5 cents a share, up from 88.75 cents.
Mr. Ebel said at the time that the company had delivered a solid quarter of financial performance “despite ongoing market volatility,” and was on track to achieve its 2023 guidance.
Enbridge bet big on the long-term value of natural gas in the energy transition with the U.S. utility acquisition it announced in September, which comprised US$9.4-billion in cash, plus US$4.6-billion of assumed debt. It launched one of the largest share sales in Canadian history to help fund the deal.
The expansion is expected to close this year. It will split the company’s earnings before interest, taxes, depreciation and amortization 50-50 between its U.S. and Canadian operations, by beefing up an American presence that grew rapidly when Enbridge bought Spectra Energy Corp. in 2016.
It will also significantly diversify the company’s geographical footprint into Ohio, Utah, Wyoming, Idaho and North Carolina. Those jurisdictions come with two major benefits, Enbridge says: supportive regulatory regimes for natural gas and projected population growth that far exceeds the U.S. average.
Last year, Enbridge executed more than $3-billion of mergers and acquisitions to absorb other companies, including seven operating landfill-to-renewable natural gas assets in Texas and Arkansas.
Mr. Ebel said in November that the deal, with Morrow Renewables, represented a unique opportunity to de-risk the company’s portfolio and “accelerate progress toward our energy transition goals.”
In 2022 it also acquired a 30-per-cent stake in Woodfibre LNG, being built near Squamish, B.C.
Enbridge stocks climbed slightly higher on Tuesday afternoon after news of the job cuts broke, to $48.31.