TC Energy Corp. announced May 1 that it has exceeded quarterly profit estimates because of higher demand for its natural gas pipelines in the United States and Canada. In addition, the company also plans to increase capital spending in support of building the Keystone XL pipeline.
In its quarterly financial report, TC Energy stated that earnings for the first quarter 2020 were $1.1 billion (CAD), compared to $1 billion during the same period in 2019.
“The availability of our infrastructure has remained largely unimpacted by recent events with utilization levels robust and in line with historical norms,” said president and CEO Russ Girling, adding that the company is “largely insulated from short-term volatility associated with volume throughput and commodity prices” because about 95 percent of its earnings are generated from regulated assets and long-term contracts.
At the end of March, TC Energy announced that it was moving forward with construction of the Keystone XL pipeline project which will require an additional investment of approximately $8 billion (USD). The pipeline is expected to enter service in 2023 and will play a critical role in connecting Canadian oil reserves with refining facilities in the U.S. Gulf Coast. The project is underpinned by new 20-year contracts for 575,000 barrels per day (bpd) that are expected to generate approximately $1.3 billion in annual earnings when the pipeline enters service.
TC Energy has partnered with the Government of Alberta, which will invest approximately $1.1 billion (USD) in equity and fully guarantee a $4.2 billion project-level credit facility through construction. Once the project is completed and placed into service, the company expects to acquire the Government of Alberta’s equity interest and refinance the credit facility.
“We appreciate the ongoing backing of landowners, customers, Indigenous groups and numerous partners in the U.S. and Canada who helped us secure project support and key regulatory approvals as this important energy infrastructure project is poised to put thousands of people to work, generate substantial economic benefits and strengthen the continent’s energy security,” Girling said. “In addition, we thank the many government officials across North America for their advocacy without which, individually and collectively, this project could not have advanced.”
While capital markets conditions have been significantly impacted by COVID-19, over the course of April, the company has taken measures to increase its financial liquidity.
“Our strong financial position and continued access to capital markets will enable us to prudently fund our now $43 billion secured capital program in a manner that is consistent with maintaining our solid credit ratings and targeted credit metrics,” Girling said.