Enbridge stock falls after CEO exit, Tallgrass deal

Enbridge shares fell to their lowest level since February after the company announced several corporate changes and transactions. The US-listed stock has declined for seven straight weeks and is about 16.5% below its year-to-date high.

Calgary-based Enbridge announced that CEO Greg Ebel will resign and that Michele Harradence will succeed him on January 1. Ebel became CEO in 2017.

The company disclosed a US$2.55 billion acquisition of Tallgrass’ crude transportation businesses. The purchase includes 75% ownership of the Pony Express Pipeline, 51% of the Powder River Gateway system, 8.4 million barrels of storage capacity and a crude marketing business called Stanchion Energy.

To help fund the transaction and other deals, Enbridge arranged a bank-led equity purchase of C$2.6 billion. A group of Canadian banks, including RBC, CIBC, BMO and Scotiabank, agreed to buy newly issued shares worth C$2.6 billion.

After the announcements, the stock moved from a year-to-date peak near US$57.60 to about US$48, producing a notable down gap on the daily chart. Technical indicators show the share price trading below the 50-day exponential moving average and a relative strength index near the commonly used oversold threshold of 30. Chart analysts cite an initial support band around US$43.75 and a nearer resistance level near US$52.

Enbridge reported revenue of C$29.3 billion for the period, up from C$14.5 billion a year earlier, and six-month revenue of C$51.0 billion versus C$33.3 billion. Commodity-related costs rose to C$22.0 billion from C$8.0 billion, and earnings attributable to shareholders were C$1.3 billion. The company also reported higher interest expense related to its capital structure.

Enbridge is one of Canada’s largest companies by market capitalization. The firm operates oil and natural gas pipelines, gas utilities and storage terminals across North America. Under Ebel’s tenure the stock rose from the low US$20s to recent levels.