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TransCanada crushes 1Q profit estimate, boosted by US pipelines

TransCanada is exporting much of its heavy crude oil to the U.S.

oil pipeline
TransCanada will pay a quarterly dividend of CAD$0.69 per share in 2Q

TransCanada (NYSE:TRP), the Canadian pipeline operator and developer of the controversial Keystone XL pipeline, trounced its profit estimates for the first quarter, thanks to the success of its oil and natural gas pipelines crisscrossing the United States.

The oil output of Canada reached peak levels last year, but as the country’s rail lines are limited and its pipelines constrained as well, much of its heavy crude oil has been exported to the U.S.

Indeed, TransCanada’s net earnings thrown up by its Canadian natural gas pipelines slipped 10.2% to C$253m in the quarter. But the earnings provided by its oil pipelines, which includes its biggest producer Keystone, soared 50% to C$341m in the first quarter, up from US$264.9m.

The group has not provided another update on the contentious expansion of Keystone, which would ramp up its ability to export crude oil from Alberta to refineries in Illinois and Texas. Keystone’s development is divisive as environmental groups have voiced concerns about spills while the oil industry argues that the project will draw much-needed investment to Alberta’s oil sands.

“We continue to advance more than $20 billion of medium to longer-term projects, including Keystone XL, Coastal GasLink and the Bruce Power life extension program,” TransCanada Chief Executive Officer Russ Girling said.

Its $7bn worth of growth project which kicked into service over the last year include expansions of its NGTL and Canadian Mainline system, the Gibraltar, Rayne Xpress, Leach XPRess and Cameron Access projects in its US natural gas pipelines and the Grand Rapids and Northern Courier liquids pipelines in Alberta.

TransCanada’s net income jumped to  CAD$734 million, or 83 cents per share in the first quarter, up from CAD$643 million, or 74 cents per share, last year. Its revenue, meanwhile, jumped to CAD$3.42bn, up from CAD$3.41bn in the year-ago quarter. Excluding items, TransCanada earned 98 cents per share, beating analysts’ consensus estimate of 84 cents.

TransCanada will pay a quarterly dividend of CAD$0.69 per share for the second quarter ending at the close of June in 2018.

TransCanada’s shares finished flat at US$42.14.

 

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Price: 74.62 CAD

TSX:TRP
Market: TSX
Market Cap: $70.02 billion
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