Al Monaco makes appearance on CNBC's Mad Money with Jim Cramer
Predictability, connectivity, and resiliency.
Enbridge Inc. president and CEO Al Monaco was a guest Thursday on CNBC’s Mad Money, talking with host Jim Cramer about Enbridge’s resilient business model that allows the company to avoid the fluctuations of the commodities market – and thrive in the midst of the current crude oil price environment.
“The headline for us these days is the resiliency of our business model,” said Mr. Monaco. “That’s driven by a few (factors) . . . certainly our low-cost structure is a big one. We’re connected to the right basins. And, importantly, we deliver to the best markets.
“The biggest issue,” he added, “is the commercial underpinning of our assets. The fact that we’ve got a low-cost structure allows us to really gain in this kind of environment. In fact, in the environment we’re in today, we’re extremely well-positioned.”
Cramer, a best-selling author and former hedge-fund manager, has built a devoted following among the North American investment community with Mad Money, which first hit the air in 2005.
Mr. Monaco was in New York on Thursday as part of the 17th annual Enbridge Day Investment Community Conference, held annually to give current and prospective Enbridge investors insight on business fundamentals, key priorities, and the financial outlook of the company.
With a tremendous resource base of unconventional oil and gas reserves, and a general lack of export connectivity, North America has an estimated $800-billion infrastructure opportunity set on the continent through 2035.
Enbridge is strategically positioned to capitalize on these trends, with assets that include:
- Our unparalleled crude oil pipeline network, anchored by a 2.85 million barrels-per-day-capacity mainline that connects directly to 3.7 million bpd of refining capacity;
- Our natural gas pipelines and processing network, which has 12 billion cubic feet per day transportation capacity, 4 bcf/d processing capacity, and 107,000 bpd fractionation capacity; and
- Our natural gas utility, Enbridge Gas Distribution, with 2.1 million customers and 420 bcf of annual distribution.
Cramer expressed enthusiasm Thursday for Enbridge’s value proposition to current and potential shareholders, noting the company’s industry-leading, expected annual average dividend growth rate of 14 to 16-percent through 2019, referenced Wednesday during 2015 Enbridge Day in Toronto.
“The company has some of the best dividend growth in the industry . . . (current dividend guidance is) double what most of the companies that I follow in this industry are going to do,” said Cramer. “In recent days, some rationalization seems to have come back into the market, because this stock’s roaring.”
Cramer and Mr. Monaco also discussed natural gas on Thursday – the advantage it currently holds over other fuels, by virtue of its low cost; and the low feedstock cost of natural gas liquids (NGLs), such as propane and benzene, which gives North America another competitive advantage – as well as Enbridge’s recent $30-billion pipeline and renewables asset transfer to Enbridge Income Fund.
“We may have the threat of higher interest rates, we may have low commodity prices right now, and there may be issues around China’s growth,” said Mr. Monaco. “Our point of view is this – regardless of all that, over the next five years, there’s a very high degree of predictability that (Enbridge’s) cash flows are going to grow.
“That’s simply because of our business model and our resiliency to these issues . . . frankly, that’s how we built our business.”
Thursday’s full Mad Money interview with Mr. Monaco is available on the CNBC website.
