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ACQUISITIONS AND DISPOSITIONS (Tables) | 9 Months Ended
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Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the estimated preliminary fair values that were assigned to the net assets of PSNC:
| September 30, 2024
(millions of Canadian dollars) |
Fair value of net assets acquired: |
Current assets (a) | 351 |
Property, plant and equipment (b) | 4,113 |
Long-term assets (c) | 203 |
Current liabilities | 292 |
Long-term debt (d) | 1,529 |
Other long-term liabilities (e) | 667 |
Deferred income tax liabilities | 365 |
Goodwill (f) | 868 |
Purchase price: |
Cash | 2,682 |
a) Current assets consist primarily of cash, trade and other accounts receivable, regulatory assets and inventory. The fair value of trade receivables from customers approximates their carrying value of $50 million due to the short period to maturity. A provision for credit and recovery risk associated with accounts receivable has been made through the expected credit loss, which totaled $2 million. b) PSNC's property, plant and equipment constitutes an integrated system of rate-regulated natural gas transmission, distribution and storage assets. For these rate-regulated assets, fair value was determined using a market participant perspective. Given the regulated nature of, and fixed return on the assets, the fair value of property, plant and equipment acquired is equal to its carrying value. c) Long-term assets consist primarily of $128 million of regulatory assets expected to be recovered from customers in future periods through rates and equity interests in a liquefied natural gas (LNG) storage facility in North Carolina and in an intrastate natural gas pipeline. d) The fair value of long-term debt was determined based on the current underlying US Treasury interest rates on instruments of similar yield, credit risk and tenor, as well as an implied credit spread based on current market conditions. We recorded a fair value adjustment to reduce long-term debt by $156 million with no corresponding regulatory offset. e) Other long-term liabilities consist primarily of regulatory liabilities expected to be refunded to customers in future periods through rates. f) Goodwill is primarily attributable to the existing assembled assets and workforce of PSNC that cannot be duplicated at the same cost by a new entrant and the enhanced scale and geographic diversity of our regulated natural gas distribution business, which provides a platform for future growth and optimization with existing assets. The goodwill balance recognized has been assigned to our Gas Distribution and Storage segment and is not tax deductible. The following table summarizes the estimated preliminary fair values that were assigned to the net assets of Questar and Wexpro:
| May 31, 2024
(millions of Canadian dollars) |
Fair value of net assets acquired: |
Current assets (a) | 464 |
Property, plant and equipment (b) | 5,921 |
Long-term assets (c) | 191 |
Current liabilities | 407 |
Long-term debt (d) | 1,343 |
Other long-term liabilities (e) | 948 |
Deferred income tax liabilities | 522 |
Goodwill (f) | 751 |
Purchase price: |
Cash | 4,107 |
a) Current assets consist primarily of cash, trade and other accounts receivable and inventory. The fair value of trade receivables from customers approximates their carrying value of $201 million due to the short period to maturity. A provision for credit and recovery risk associated with accounts receivable has been made through the expected credit loss, which totaled $9 million. b) Questar's property, plant and equipment constitutes an integrated system of rate-regulated natural gas transmission, distribution and storage assets. Wexpro's property, plant and equipment consists of cost-of-service gas and oil properties developed and produced for Questar. For these rate-regulated assets, fair value was determined using a market participant perspective. Given the regulated nature of, and fixed return on the assets, the fair value of property, plant and equipment acquired is equal to its carrying value. c) Long-term assets consist primarily of funds collected from Questar by Wexpro and held in trust to fund future asset retirement obligations (ARO), as well as regulatory assets expected to be recovered from customers in future periods through rates. d) The fair value of long-term debt was determined based on the current underlying US Treasury interest rates on instruments of similar yield, credit risk and tenor, as well as an implied credit spread based on current market conditions. We recorded a fair value adjustment to reduce long-term debt by $301 million with no corresponding regulatory offset. e) Other long-term liabilities consist primarily of regulatory liabilities, expected to be refunded to customers in future periods through rates, as well as ARO. The fair value of the ARO liability was determined using a discounted cash flow approach. f) Goodwill is primarily attributable to the existing assembled assets and workforce of Questar and Wexpro that cannot be duplicated at the same cost by a new entrant and the enhanced scale and geographic diversity of our regulated natural gas distribution business, which provides a platform for future growth and optimization with existing assets. The goodwill balance recognized has been assigned to our Gas Distribution and Storage segment and is not tax deductible. The following table summarizes the estimated preliminary fair values that were assigned to the net assets of EOG:
| March 6, 2024
(millions of Canadian dollars) |
Fair value of net assets acquired: |
Current assets (a) | 641 |
Property, plant and equipment (b) | 7,253 |
Long-term assets (c) | 1,647 |
Current liabilities | 670 |
Long-term debt (d) | 2,612 |
Other long-term liabilities (e) | 993 |
Deferred income tax liabilities | 1,036 |
Goodwill (f) | 1,608 |
Purchase price: |
Cash | 5,838 |
a) Current assets consist primarily of cash, trade and other accounts receivable, prepaid expenses, regulatory assets and inventory. The fair value of trade receivables from customers approximates their carrying value of $376 million due to the short period to maturity. A provision for credit and recovery risk associated with accounts receivable has been made through the expected credit loss, which totaled $3 million. b) EOG's property, plant and equipment constitutes an integrated system of rate-regulated natural gas transmission, gathering, distribution and storage assets. For these rate-regulated assets, fair value was determined using a market participant perspective. Given the regulated nature of, and fixed return on the assets, the fair value of property, plant and equipment acquired is equal to its carrying value. c) Long-term assets consist primarily of overfunded pension plan assets of $395 million and $1.2 billion of regulatory assets expected to be recovered from customers in future periods through rates. Pension plan assets attributable to the workforce acquired from EOG were transferred in cash to an Enbridge-sponsored pension plan based on their fair value as at December 31, 2023, subject to closing adjustments. The fair value of plan assets was determined using unadjusted quoted market prices for identical investments. d) The fair value of long-term debt was determined based on the current underlying US Treasury interest rates on instruments of similar yield, credit risk and tenor, as well as an implied credit spread based on current market conditions. We recorded a fair value adjustment to reduce long-term debt by $478 million with no corresponding regulatory offset. e) Other long-term liabilities consist primarily of regulatory liabilities expected to be refunded to customers in future periods through rates. f) Goodwill is primarily attributable to the existing assembled assets and workforce of EOG that cannot be duplicated at the same cost by a new entrant and the enhanced scale and geographic diversity of our regulated natural gas distribution business, which provides a platform for future growth and optimization with existing assets. The goodwill balance recognized has been assigned to our Gas Distribution and Storage segment and is not tax deductible. The following table summarizes the estimated preliminary fair values that were assigned to the net assets of Tomorrow RNG:
| January 2, 2024
(millions of Canadian dollars) |
Fair value of net assets acquired: |
Current assets | 31 |
Intangible assets (a) | 925 |
Property, plant and equipment (b) | 174 |
Current liabilities | 5 |
Goodwill (c) | 223 |
Purchase price: |
Cash | 584 |
Deferred consideration (d): |
Current portion of long-term debt | 550 |
Long-term debt | 207 |
Other adjustments | 7 |
| 1,348 |
a) Intangible assets consist of long-term gas supply agreements with the respective facility's landfill owner. Fair value was determined using an income-based approach, specifically the multi-period excess earnings method, by estimating the present value of the after-tax cash flows attributable to the gas rights. The intangible assets will be amortized on a straight-line basis over the term of the respective agreement, inclusive of extension options, which range from 13 to 42 years. b) Tomorrow RNG's property, plant and equipment constitutes specialized landfill gas plant and equipment which collects gas produced by waste decomposition, treats and compresses the gas to pipeline specifications. The direct method of replacement cost was used to determine the majority of the fair value of property, plant and equipment. Adjustments were then applied for estimated physical deterioration. c) Goodwill is primarily attributable to expected future returns from a portfolio of both operating and scalable RNG assets, furthering the diversity of our renewable projects portfolio and accelerating progress toward our energy transition goals. The goodwill balance recognized has been assigned to our Gas Transmission segment and is tax deductible over 15 years. d) We entered into six non-interest bearing promissory notes due to Morrow Renewables, the total value of which represents deferred payments of $808 million (US$606 million) due within two years. The first and second payments are due on January 2, 2025 and December 31, 2025, respectively. The $757 million (US$568 million) recognized in the purchase price represents the fair value of deferred consideration at the date of acquisition using the imputed interest rate method over the terms of the notes.
Schedule of Supplemental Pro Forma Consolidated Financial Information | Our supplemental pro forma consolidated financial information for the three and nine months ended September 30, 2024 and 2023, including the results of operations for PSNC as if the PSNC Acquisition had been completed on January 1, 2023, are as follows:
| Three months ended September 30, |  | Nine months ended September 30,
| 2024 | 2023 |  | 2024 | 2023
(unaudited; millions of Canadian dollars) |  |  |  |  |
Operating revenues | 15,010 |  | 9,949 |  |  | 37,921 |  | 33,038 |
Earnings attributable to common shareholders 1 | 1,276 |  | 506 |  |  | 4,655 |  | 4,173 |
1 Includes adjustment for pro forma interest expense on debt financing for the PSNC Acquisition of $12 million and $48 million (after-tax of $9 million and $37 million) for the three and nine months ended September 30, 2023, respectively. Our supplemental pro forma consolidated financial information for the three and nine months ended September 30, 2024 and 2023, including the results of operations for Questar and Wexpro as if the Questar Acquisition had been completed on January 1, 2023, are as follows:
| Three months ended September 30, |  | Nine months ended September 30,
| 2024 | 2023 |  | 2024 | 2023
(unaudited; millions of Canadian dollars) |  |  |  |  |
Operating revenues | 14,882 |  | 10,040 |  |  | 38,471 |  | 33,885 |
Earnings attributable to common shareholders 1 | 1,293 |  | 501 |  |  | 4,695 |  | 4,153 |
1 Includes adjustment for pro forma interest expense on debt financing for the Questar Acquisition of $18 million and $70 million (after-tax of $14 million and $52 million) for the three and nine months ended September 30, 2023, respectively. Our supplemental pro forma consolidated financial information for the three and nine months ended September 30, 2024 and 2023, including the results of operations for EOG as if the EOG Acquisition had been completed on January 1, 2023, are as follows:
| Three months ended September 30, |  | Nine months ended September 30,
| 2024 | 2023 |  | 2024 | 2023
(unaudited; millions of Canadian dollars) |  |  |  |  |
Operating revenues | 14,882 |  | 10,131 |  |  | 37,568 |  | 33,375 |
Earnings attributable to common shareholders 1 | 1,296 |  | 625 |  |  | 4,614 |  | 4,266 |
1 Includes adjustment for pro forma interest expense on debt financing for the EOG Acquisition of $26 million and $100 million (after-tax of $20 million and $77 million) for the three and nine months ended September 30, 2023, respectively.

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