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    TC Energy Reports 2Q Earnings Rise

Summary

Company still pursuing sale of up to 75% of Coastal GasLink

by: Dale Lunan

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TC Energy Reports 2Q Earnings Rise

Canadian energy infrastructure developer TC Energy (formerly TransCanada) said August 1 it had net income attributable to common shares of C$1.1bn (US$833mn) in 2Q 2019, up from 2Q 2018 net income of C$785mn.

Comparable earnings in the second quarter were C$924mn, up from C$768mn in 2Q 2018. Comparable earnings in 2Q 2019 included net income less TC Energy’s gain on the sale of its Coolidge generating station in Arizona, the effects of a recent Alberta corporate income tax rate reduction, the contribution of northeast US power marketing contracts and various risk management activities.

“During the second quarter of 2019, our diversified portfolio of critical energy infrastructure assets continued to perform very well,” TC Energy CEO Russ Girling said. “Comparable earnings per share increased 16% compared to the same period last year while comparable funds generated from operations of C$1.7bn were 14% higher.”

The gains, Girling added, also reflect some C$5.6bn of growth projects that entered service in the first half. An estimated C$7.0bn of growth projects are expected to enter service in 2019, part of TC Energy’s total C$32bn portfolio of growth projects, which include its Coastal GasLink (CGL) pipeline in BC, expansion projects on its Canadian Mainline system and capacity additions in the US designed to serve Gulf Coast LNG export projects.

Late in the second quarter, Canada’s national energy regulator, the National Energy Board (NEB), confirmed provincial jurisdiction for CGL, and TC Energy is continuing to advance funding plans for the C$6.2bn project through a combination of the sale of up to a 75% ownership interest and project financing. Both transactions are expected to be completed in 4Q 2019.

Also in the second quarter, the NEB approved TC Energy’s North Bay Junction long-term fixed-price toll, allowing the company to provide discounted transportation service to local distribution companies in Ontario, Quebec, Atlantic Canada and the northeastern US who had access to less expensive shale gas from the Marcellus and Utica basins in the US. Among the potential customers supporting TC Energy’s application were the proposed ProjetBecancour urea and methanol production plant in Quebec and GNL Quebec’s proposed 11mn mt/yr Energie Saguenay LNG export terminal on the Saguenay-St. Lawrence Waterway north of Quebec City.

In Mexico, TC Energy completed construction and commissioning activities of its 775-km (482-mile) Sur de Texas pipeline, which has the capacity to provide up to 2.6bn ft3/day of natural gas directly to Mexico from the US. Although notice of completion and readiness for service was provided to Mexican regulators and Mexico’s state electric utility CFE, the latter has not acknowledged that notice, preventing TC Energy from commencing transportation service on Sur de Texas.

And TC Energy noted that Mexico’s president, Andres Manuel Lopez Obrador, as well as the CEO of CFE, have questioned various provisions of contracts covering Sur de Texas and other pipelines it has built recently in Mexico.

“The parties have invited us to participate in negotiations to address these perceived issues and we have commenced discussions,” TC Energy said.