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    TC Energy Q4 2022 earnings hit by C$2.6bn CGL impairment


Impairment resulted from 30% jump in capital cost for Coastal GasLink. [Image credit: Coastal GasLink]

by: Dale Lunan

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TC Energy Q4 2022 earnings hit by C$2.6bn CGL impairment

Canadian pipeline and energy infrastructure company TC Energy said February 14 it had a Q4 2022 net loss of C$1.5bn (US$1.1bn) compared to Q4 2021 net income of C$1.12bn, while full-year 2022 net income fell to C$641mn from C$1.81bn.

The Q4 loss, it said, reflected an after-tax impairment of C$2.6bn on its equity investment in the Coastal GasLink partnership flowing from a 30% increase, to C$14.5bn, of the cost of the pipeline, which will deliver feedgas to the LNG Canada project on Canada’s west coast. TC Energy announced the capital cost increase on February 1.


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It expects to fund an additional C$3.3bn related to the revised capital cost of CGL and warned that “a significant portion of the company’s future investment” in the pipeline is expected to be impaired.

TC Energy holds a 35% equity interest in CGL, with the balance held by a partnership of KKR & Co and Alberta Investment Management Corp. In March 2022, TC Energy signed option agreements with two First Nation investment groups to sell a 10% interest in CGL to 16 of 20 First Nations along the 670-km pipeline route, with the option to be exercised once CGL enters commercial service.

The pipeline, which in its first phase will deliver 1.8bn ft3/day to the LNG Canada project, is about 84% complete, TC Energy said, with mechanical completion targeted for the end of 2023. The entire route has been cleared, grading is more than 96% complete, and more than 510 km of pipe has been welded, lowered and backfilled.

Despite the CGL impairments, TC Energy characterised its 2022 results as strong, with comparable EBITDA rising to C$2.7bn from C$2.4bn in Q4 2022 compared to Q4 2021 and full-year EBITDA increasing to C$9.9bn in 2022 from C$9.4bn in 2021.

“Our business remains resilient and is expected to deliver strong comparable EBITDA growth in 2023,” CEO Francois Poirier said. “We have a defined funding plan in place that will allow us to continue to progress our industry leading capital program and accelerate our deleveraging target.”

Reflecting its confidence in that outlook, TC Energy raised its quarterly dividend to C$0.93/share for the quarter ended March 31, 2023, equivalent to C$3.72/share on an annualised basis. The 3.3% increase, it said, marked the 23rd consecutive year that its board had raised the dividend.

Q4 results, TC Energy said, were underpinned by strong utilisation across all its assets, highlighted by strong demand for natural gas transportation capacity in December amidst cold temperatures across North America. On December 19, its NGTL system in Canada set a new delivery record of 16.4bn ft3, while on December 23, US natural gas pipelines reported an all-time peak delivery record of 36.6bn ft3.