TransCanada Reports 1Q Earnings Boost
Canadian pipeline TransCanada reported April 27 its 1Q 2018 net income increased to $734mn from $643mn in the comparable 1Q 2017 period, while comparable earnings (a non-GAAP measure) for the quarter rose to $870mn from $698mn.
Comparable earnings before interest, tax, depreciation and amortisation – another non-GAAP measure – rose to $2.07bn from $1.98bn.
“During the first quarter of 2018 our diversified portfolio of high-quality energy infrastructure assets continued to perform very well,” TransCanada CEO Russ Girling said. “Comparable earnings per share increased 21% compared to the same period last year despite the sale of our US Northeast power assets, reflecting the strong performance of our legacy assets and contributions from approximately $7bn of growth projects that were placed into service over the last 12 months.”
Natural gas growth projects included expansions of TransCanada’s NGTL system in Alberta and its Canadian Mainline system and the Gibraltar, Rayne XPress, Leach XPress and Cameron Access projects in the US. Growth projects on the liquids side included the Grand Rapids and Northern Courier pipelines in Alberta.
Girling said TransCanada continues to advance its $21bn near-term capital program, with about $11bn of new projects poised to enter service by the end of 2018.
“We have invested approximately $7bn into these projects to date and, despite recent significant changes to the master limited partnerships (MLP) sector, are well positioned to fund the remainder through our strong and growing internally generated cash flow, along with a broad spectrum of financing levers including access to capital markets on compelling terms and potential portfolio management activities,” he said.
US tax reforms implemented last November and new rules being proposed by the Federal Energy Regulatory Commission (Ferc) could impact how MLPS, some of which apply to certain TransCanada assets in the US, set rates for customers. In certain cases, MLPs might need to refund a portion of income tax liabilities passed through to customers via their rate structures.
In addition to the near-term capital programs, TransCanada continues to advance more than $20bn of medium to longer-term projects, including its Keystone XL crude oil pipeline, the Coastal GasLink project, which would deliver feed gas to LNG Canada’s Kitimat export terminal in BC for which EPC contracts have been awarded, and a life-extension program at the Bruce Power nuclear generating station in Ontario.