Tudor 09:48 AM EDT, 05/05/2020 (MT Newswires) -- Tudor, Pickering & Holt on Tuesday reiterated its buy rating on the shares of Enbridge (ENB.TO) after the company reached an agreement with oil producers to store as much as 0.9 million barrels of crude oil in its pipelines as pandemic quarantines cut demand.
"Enbridge and Mainline shippers have agreed to terms allowing for 900 mbbls of Mixed Sweet crude storage on the Canadian Mainline effective June 1st for a negotiated tariff of C$1.20/bbl per month," the investment bank said. " ... The crude pricing collapse has created high demand for storage in Western Canada allowing Enbridge to provide temporary regulated storage, while utilizing idled capacity on the legacy Line 3 pipeline before being decommissioned next year. This temporary storage, along with further maintenance optimizations could provide more than 2.0 mmbbls of additional storage capacity for 2020. No current plans to create storage on other lines (Express, Bakken) as placing the Canadian portion of the new Line 3 in-service created a unique situation though, depending on duration of demand, we expect Enbridge will continue looking for ways to optimize assets. We view this announcement constructively as the company offsets Mainline volume degradation from weaker refinery utilization (TPHe ~C$500M), but ultimately view the upside scenario of C$17M (2.0 mmbbls for Jun-Dec) as immaterial for the stock."