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    TC Energy Reports Coastal GasLink Cost Increase


Company reports lower net income but higher comparable earnings in 3Q

by: Dale Lunan

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TC Energy Reports Coastal GasLink Cost Increase

Canadian infrastructure developer TC Energy said November 1 the estimated capital cost of the Coastal GasLink pipeline serving Anglo-Dutch Shell’s LNG Canada project in BC had increased to C$6.6bn (US$5.01bn) from C$6.2bn.

The increase, the company said in its 3Q 2019 earnings report, reflected the increased scope and refinement of construction estimates for rock work and watercourse crossings. The company continues to advance funding plans for the project which include a combination of the sale of up to 75% equity in the pipeline and arrangements for project financing, both of which are proceeding as planned.

Net income attributable to common shares in 3Q 2019 fell to C$739mn from C$928mn, TC Energy said, but comparable earnings increased to $970mn from C$902mn. The company attributed the increased comparable earnings to improved pre-tax earnings (Ebitda), higher income tax expense, higher depreciation and reduced allowances for funds used during construction, which largely reflected the completion of growth projects on the Columbia Gas and Columbia Gulf systems.

“Despite significant asset sales that have accelerated the strengthening of our balance sheet, comparable earnings per share increased 4% compared to the same period last year while comparable funds generated from operations of C$1.8bn were 15% higher,” TC Energy CEO Russ Girling said. “The increases reflect the robust performance of our legacy assets and contributions from the approximately C$8.2bn of growth projects that have entered service to date in 2019, partially offset by lower contributions from approximately C$3.4bn of assets that were monetised during the first nine months of the year.”

The asset sales included TC Energy’s Coolidge gas-fired power plant in Arizona, certain Columbia Midstream assets and an 85% equity interest in Northern Courier, a bitumen pipeline in Alberta. During the quarter, the company also reached agreement to sell three gas-fired power plants in Ontario for about C$2.87bn, a transaction which is expected to close in 1Q 2020.

Taken together, the asset sales are expected to generate proceeds of about C$6.3bn, TC Energy said.