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Enbridge (ENB), Bad River Tribe to Form Line 5 Oil Spill Plan

Enbridge Inc. ENB and the Bad River tribe have been ordered by a federal judge to reach a decision to shut down and remove Line 5, as it could result in a catastrophic oil leak on the Bad River.

The judge ordered Enbridge and the Bad River tribe to establish a strategy to prevent the oil flow, if a rupture occurs, and stop the erosion along the Bad River by Dec 17. Enbridge and the Bad River tribe have to submit a joint proposal or provide their proposals if no agreement can be reached by Dec 24.

The rupture of Line 5 could have disastrous consequences in the Bad River watershed and Lake Superior. Hence, the court believes that a pipeline rupture would be an irrational intervention against the Band’s rights.

Line 5, which is part of Enbridge’s larger Mainline and Lakehead systems, extends from Wisconsin through Michigan and into Ontario. The pipeline is a major source of 540,000 barrels per day of propane and crude oil supply for Michigan and nearby areas.

In 2019, the Bad River Band of Lake Superior Chippewa sued Enbridge in federal court and forced the company to shut down Line 5 as it poses an unreasonable threat to health and safety due to the risk of a potential rupture.

Enbridge has already taken actions to prevent a rupture of Line 5, which involves a more robust shutdown plan, more monitoring, installing emergency flow restricting device shutoff valves, accelerating the purging process to clear the portion of the pipeline near the meander, proposing remediation to fight the erosion and working on reroute plans.

The Bad River Band has constantly asked Enbridge to completely and permanently shut Line 5. Enbridge plans to develop a $450-million pipeline running 41 miles around the Bad River reservation in response to Bad River’s lawsuit. Meanwhile, the Line 5 oil and gas pipeline will continue to operate.

Price Performance

Shares of Enbridge have underperformed the industry in the past six months. The stock has lost 7.8% compared with the industry’s 11.4% decline.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

 

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 carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Murphy USA Inc. MUSA reported third-quarter 2022 earnings per share of $9.28, beating the Zacks Consensus Estimate of $7.82. The outperformance can be attributed to a rise in the retail gasoline price and a higher retail margin of 37.6 cents per gallon, up 41.4% year over year.

In more good news for investors, MUSA’s board of directors recently declared a quarterly cash dividend of 35 cents per share to its common shareholders of record as of Nov 8. The payout, which represents a 9% sequential increase, will be made on Dec 1.

MPLX LP MPLX is a master limited partnership that provides a wide range of midstream energy services, including fuel distribution solutions. MPLX’s third-quarter earnings of 96 cents per unit beat the Zacks Consensus Estimate of 81 cents.

MPLX’s distribution per unit was 77.5 cents for the third quarter, indicating a 10% hike from the prior distribution of 70.5 cents. The distribution will be paid out on Nov 22, 2022, to common unitholders of record as of Nov 15, 2022.

Exxon Mobil Corporation XOM reported third-quarter 2022 earnings per share of $4.45, excluding identified items, beating the Zacks Consensus Estimate of $3.88. Strong earnings have resulted from higher realized commodity prices and oil-equivalent production, and strong refining margins.

ExxonMobil has announced a fourth-quarter dividend of 91 cents per share, indicating an increase of 3.4% from the last dividend payment of 88 cents. The dividend is payable on Dec 9.

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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report

Enbridge Inc (ENB) : Free Stock Analysis Report

Murphy USA Inc. (MUSA) : Free Stock Analysis Report

MPLX LP (MPLX) : Free Stock Analysis Report

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