Enbridge Inc. (ENB) announced that it will have to shell out a settlement of $6.25 million over a 2010 oil spill in southwestern Michigan. A new filing has been made in this respect at Grand Rapids federal court. However, the settlement needs the approval of Judge Gordon Quist.
The 2010 pipeline leak spewed more than 800,000 gallons of crude oil into the Kalamazoo River and Talmadge Creek. Enbridge has agreed to donate $150,000 to local groups committed to environmental conservation, such as the Kalamazoo River Watershed Council and the Calhoun Conservation District. The company has estimated cleanup costs of about $1.2 billion, including $227 million for environmental consultants.
Canada-based Enbridge Inc. is a leading energy transporter and distributor company. As a transporter, Enbridge operates the world's longest crude oil and liquids pipeline system in Canada and the U.S. The company is also involved in natural gas transmission and midstream businesses in other countries. As a distributor, Enbridge owns and operates Canada's largest natural gas distribution company. It provides distribution services in Ontario, Quebec, New Brunswick and New York.
In spite of hefty settlement costs, the company remains optimistic about its long-term growth. It expects various organic projects to be commissioned in 2015. These projects are characterized by their longer term and lower risk.
However, we remain apprehensive about the company’s midstream natural gas business, which is sensitive to changes in natural gas supply-demand fundamentals and commodity cycles associated with gas processing margins.
Enbridge currently carries a Zacks Rank #3 (Hold). For investors interested in the oil and gas sector, there are better-ranked stocks like Spectra Energy Partners, LP (SEP), Seadrill Partners LLC (SDLP) and Sandridge Mississippian Trust II (SDR). All these carry a Zacks Rank #1 (Strong Buy).
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