Canadian Pipeline Major Reports Strong 2Q
Canadian pipeline giant TransCanada announced August 2 second quarter earnings this year of C$768mn (US$590mn), a 16% increase from 2Q 2017 earnings of C$659mn. Net income attributable to common shares, however, slipped to C$785mn from C$881mn, reflecting an C$11mn after-tax loss related to its US Northeast power marketing contracts, which are being wound down.
“During the second quarter of 2018 our diversified portfolio of critical energy infrastructure assets continued to perform very well,” TransCanada CEO Russ Girling said. “Comparable earnings of $0.86/share increased 13% compared to the same period last year, reflecting the strong performance of our legacy assets, contributions from approximately C$7bn of growth projects that entered service over the last 12 months and the positive impact of US tax reform.”
With underlying market fundamentals remaining strong and some C$28bn of near-term growth projects, Girling said earnings and cash flow are expected to continue to rise. The near-term growth projects, TransCanada has said, will be funded from internally-generated cash flow and divestments of certain assets, which so far this year have raised some $6.1bn, a figure which does not include an agreement, also announced August 2, to sell TransCanada’s 62% in Cartier Wind Energy to Innergex Renewable Energy for C$630mn.
“This transaction allows us to capture the high value the market places on contracted renewable energy assets and redeploy the proceeds into our near-term growth projects,” Girling said.
The Cartier assets include five wind farms in Quebec with a total generating capacity of 590MW, of which TransCanada’s share is 365MW. The sale is expected to close in 4Q 2018.
Even with the Cartier sale, TransCanada remains one of Canada’s largest private-sector power generators, producing enough power to meet the needs of more than 6mn homes. And its power portfolio continues to grow, with the construction of a 900-MW natural gas-fired power plant in Napanee, Ontario and commitments to major refurbishments at the Bruce Power nuclear facility in Ontario. The C$1.2bn (US$923mn) Napanee project is nearing completion and is expected to enter commercial operation in 4Q 2018.