Enbridge Inc. (ENB) has announced a reduction in tolls for its Canadian oil export pipelines, following increased competition from the newly expanded Trans Mountain pipeline system. The tolls for shipping heavy crude from Hardisty, Alberta, to Texas via Enbridge’s network will drop to $9.4877 per barrel from the previous $10.7006 per barrel, per a Bloomberg report.

Impact of Trans Mountain Expansion

The tolls were reduced after the Trans Mountain Expansion (“TMX”) began operations. The TMX now enables the transport of 890,000 barrels per day to the British Columbia coast, where oil is primarily exported to the U.S. West Coast and Asia. This new capacity has provided Canadian oil producers with added export options, reducing their dependence on Enbridge’s system.

Changes in Apportionment Rates

Since the TMX began operations in May, apportionment — essentially a form of rationing — on Enbridge’s Mainline system has significantly decreased. Apportionment on this system, which transports oil from Alberta to the U.S. Midwest, fell to zero in September from more than 20% in March. This shift highlights the increased pipeline capacity available to Canadian producers.

Enbridge’s Perspective on Market Position

Enbridge chief executive officer Greg Ebel noted that the lack of apportionment is typical for this time of the year. It expects to ship 3 million barrels per day this year. Ebel emphasized that Enbridge’s pipelines offer access to 75% of all U.S. refineries in contrast to TMX’s focus on single-market exports.

The toll reduction by Enbridge reflects its strategic response to the heightened competition in the Canadian oil transportation market, as new infrastructure reshapes the dynamics of oil exports.

Zacks Rank & Key Picks

Currently, Enbridge carries a Zack Rank #3 (Hold).

Investors interested in the energy sector may look at some better-ranked stocks like SM Energy Company SM, MPLX LP MPLX and Northern Oil and Gas, Inc. NOG. While SM Energy currently sports a Zacks Rank #1 (Strong Buy), MPLX and Northern Oil and Gas carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

SM Energy is set to expand its oil-centered operations in the coming years, with an increasing focus on crude oil, especially in the Permian Basin and Eagle Ford regions. The company’s attractive oil and gas investments should create long-term value for shareholders.

The Zacks Consensus Estimate for SM’s 2024 EPS is pegged at $7.57. The company has a Zacks Style Score of A for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.

MPLX derives stable fee-based revenues, driven by long-term contracts, with minimal exposure to commodity-price fluctuations. The partnership’s robust capital expenditure forecast for 2024, along with significant expansion initiatives, underscores its commitment to sustainable growth.

The Zacks Consensus Estimate for MPLX’s 2024 EPS is pegged at $4.21. The company has a Zacks Style Score of B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.

Northern Oil and Gas’ core operations are focused on three leading basins of the United States — the Williston, Permian and the Appalachian. The upstream operator employs a unique nonoperating business model, which helps it to keep costs down and increase cash flow.

The Zacks Consensus Estimate for NOG’s 2024 EPS is pegged at $5.21. The company has witnessed upward earnings estimate revisions for 2024 in the past seven days.

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