TransCanada: Blue-Chip Canadian Pipeline Company At A Depressed Valuation
Thomas Lott • 35 Comments
Thomas Lott • 35 Comments
May 18, 2015, 7:45 PM
- Goldman Sachs had a lot to say about all corners of the energy sector today in addition to the cut in its long-term oil price forecast, its Sell recommendations for oil majors BP, Statoil (NYSE:STO) and Chevron (NYSE:CVX), and its gloomy outlook for offshore drillers Transocean (NYSE:RIG), Diamond Offshore (NYSE:DO) and Atwood Oceanics (NYSE:ATW).
- Goldman awards a Buy rating for Exxon Mobil (NYSE:XOM), "the only U.S. or European major that can generate sufficient free cash flow to cover its dividend near $60/bbl in 2016-17"; while the firm says other oil majors will be struggling to keep the dividend flat, XOM will be in a position to increase the dividend for the next several years.
- With its expectation for long-term weakness in oil and gas prices, Goldman sees risk exposure in many names that are reliant on commodity prices, suggesting selling LINE, DPM, NGLS, while predicting PAGP and NS would benefit from a removal of the U.S. crude oil export ban.
- The firm thinks many midstream MLP names now offer attractive valuations, recommending ENB, EPD, ETE, PAA, SXL, WNRL.
- Goldman sees an upturn for frac sand provider Emerge Energy (NYSE:EMES), upgrading shares to Buy from Neutral.
- Other Buys: CLR, NFX, CQP, HEP.
- Other Sells: TRP, TCP, GPOR, MUR, GTE
May 15, 2015, 2:45 PM
- Canada says it is committing to cut greenhouse gas emissions by 30% below 2005 levels by 2030, partly by introducing new regulations on its oil and gas sector.
- Environment Minister Aglukkaq says Canada will cut its emissions to 515 metric megatons by 2030 from 726 metric megatons in 2013; earlier this week, Ontario - Canada’s most populous province - set its own 2030 target of 112 megatons, which would represent a 46% cut from 2005 levels.
- To meet the new target, Canada will develop regulations to cut methane emissions from the oil and gas sector, such as industrial leaks and gas flares, as well as new rules to control emissions from the electricity and chemical sectors, including from nitrogen fertilizers.
- Relevant tickers: SU, ENB, TRP, IMO, CNQ, CVE, TCK, TAC, OTCQB:HUSKF, OTCQX:COSWF
May 14, 2015, 1:10 PM
- More than 60 organizations are calling on Canada's National Energy Board to suspend TransCanada’s (TRP +0.4%) application for the Energy East pipeline.
- TRP is due to update its application for the pipeline in Q4 with a new location for a proposed marine terminal in Quebec, but the groups say the regulator should overhaul the review process entirely and restart its evaluation of Energy East from the beginning once the company submits the new information.
- TRP is searching for a new location for the marine terminal after a Quebec Superior Court injunction last fall against seismic work at the site meant to protect nearby beluga whale calving grounds.
May 7, 2015, 6:25 PM
- Canadian oil producers plunged for a second straight day as "all bets are off" after election results in Alberta raised concerns over the possibility of higher taxes for the companies.
- Among today's losers: SU -2.6%, OTCQB:HUSKF -5.2%, GTE -5.8%, PWE -5.7%, IMO -1%, CVE -1%, OTCQX:COSWF -3.4%, OTCPK:MEGEF -5%.
- COSWF is among the most exposed to a potential hike in royalties and stricter environmental policies, while electricity supplier TransAlta (NYSE:TAC) would suffer from the new government’s vow to shut coal plants sooner than planned, according to analysts at BMO Nesbitt Burns and RBC Dominion.
- Advice is split on owning stocks of companies that transport and process fuels in Alberta; Raymond James says stocks such as TransCanada (NYSE:TRP) and Enbridge (NYSE:ENB) are less directly exposed to reduced investment in the sector, but RBC advises to sell pipeline and midstream companies with operations in Alberta.
- Analysts also are divided about how much producers with oil refineries, such as SU and IMO, could offset losses from potentially higher royalties by boosting processing of crude in Alberta, a move pro-labor NDP has pledged to support.
May 6, 2015, 2:36 PM
- Canadian energy stocks are broadly lower after the shocking election result in Alberta raised questions about the future of the country's oil industry: SU -3.3%, ENB -2.8%, TRP -2.6%, IMO -2.3%, CNQ -2.3%, CVE -5.8%, OTCQB:HUSKF -1%, TCK -1.6%, TAC -4.1%, OTCQX:COSWF -6%.
- "Energy is such a critical issue to Alberta, I’m really not that concerned," ENB CEO Al Monaco says, but investors and analysts disagree.
- "It’s completely devastating" for energy companies and investors, saysCanoe Financial's Rafi Tahmazian of stated plans by the newly elected government to raise corporate taxes, review the government’s take of energy revenue, scale back advocacy for pipelines and phase out coal power more quickly.
- “If you are invested in energy stocks, you should be concerned,” says AltaCorp’s Jeremy McCrea, noting that drillers already face higher costs to extract oil and gas in Alberta than in many jurisdictions, so an increase in royalties would make the province even less competitive.
May 6, 2015, 7:38 AM
- In a stunning election result, voters in Canada's energy-rich Alberta province swept aside the four-decade hold on power by the ruling Progressive Conservative Party and elected an New Democratic Party majority government that wants to raise corporate taxes and increase oil and gas royalties.
- NDP leader Rachel Notley - who has vowed to raise the corporate tax rate to 12% at a time energy companies are reeling from layoffs and project cancellations amid weaker oil prices - is expected to succeed Jim Prentice as Alberta’s premier.
- Notley has said she would not lobby for the proposed Keystone XL pipeline to link Alberta’s oil deposits to refineries in Texas, and that she is against the Northern Gateway pipeline from Alberta to the British Columbia coast.
- She also has promised another review of oil royalties at a time other oil producing areas around the world that are also struggling with low oil prices are expected to make their terms more appealing.
- Relevant tickers: ENB, SU, TRP, IMO, CNQ, CVE, OTCQB:HUSKF, OTCQX:COSWF, XOM, BP, RDS.A, RDS.B
May 1, 2015, 7:20 PM
- Despite Pres. Obama's refusal to grant a permit for the northern cross-border leg of the Keystone XL pipeline (NYSE:TRP), "just as water will find its way through any crack in a foundation," Canada’s oil keeps streaming its way to Texas’ Gulf refineries, Financial Post's Claudia Cattaneo writes.
- While Keystone’s approval has sat stalled for six years, other pipelines have been built or expanded to ease bottlenecks: TRP's southern leg of Keystone XL and its Marketlink project from Cushing to Port Arthur, Enbridge (NYSE:ENB) and Enterprise Products' (NYSE:EPD) Seaway pipeline from Cushing to Freeport, and there's heavy oil coming by train and barge - it takes longer, costs more and is less efficient, but it's coming nevertheless.
- Even a prolonged slump in oil prices is not likely to stop Canada’s rush to the Texas coast: Both Imperial Oil (NYSEMKT:IMO) and Suncor (NYSE:SU) said this week their Q1 oil sands production levels are up 11% Y/Y, with IMO soon doubling production at the Kearl oil sands mine and new production beginning at its Nabiye operation.
May 1, 2015, 8:14 AM
- TransCanada (NYSE:TRP) declares C$0.52/share quarterly dividend, in line with previous.
- Forward yield 3.7%
- Payable July 31; for shareholders of record June 30; ex-div June 26.
May 1, 2015, 8:13 AM
- TransCanada (NYSE:TRP): Q1 EPS of $0.66 beats by $0.02.
- Revenue of $2.87B (-0.3% Y/Y) misses by $210M.
Apr. 30, 2015, 5:30 PM
Apr. 27, 2015, 5:57 PM
- South Dakota's Public Utilities Commission votes to delay a key hearing discussing construction of the long-delayed Keystone XL pipeline through the state, agreeing with Keystone opponents who asked for the postponement because they said the original schedule was too tight.
- The hearing, which had been planned to begin next week, now likely will be held later this summer.
- The state initially authorized TransCanada (NYSE:TRP) to construct the project in 2010, but state rules dictate permits must be re-authorized if the construction of the project does not start within four years of their issuance.
Apr. 24, 2015, 12:58 PM
- TransCanada (TRP -0.1%) - still twisting in the wind over delays involving its Keystone XL project - is asking the U.S. government to permit a new and different pipeline project, filing an application to receive a presidential permit that will let it construct a 200-mile pipeline across the U.S.-Canadian border.
- TRP's proposed $600M Upland pipeline project aims to transport up to 300K bbl/day of North Dakota crude to a connection in Saskatchewan, where ~70K barrels would flow on TRP’s planned Energy East pipeline, which aims to ship up to 1.1M bbl/day nearly 3K miles across Canada to refineries and ports along the country’s east coast.
- The move indicates TRP is not giving up on its oil shipping plans despite being embroiled in the political battle over Keystone since 2008.
Apr. 21, 2015, 5:18 PM
- TransCanada (NYSE:TRP) is considering ways to get Canadian crude to Louisiana refineries now that it has forged a deal to increase its reach to southeast Texas Gulf coast plants, the company's head of liquids pipelines says.
- Paul Miller tells the IHS CERAWeek energy conference that Louisiana's 3M bbl/day refining market could be TRP's next target for Canadian crude deliveries, possibly via an extension of its 700K bbl/day Oklahoma-to-Texas MarketLink pipeline which could connect to a new TRP terminal or to a partner's operation, much like existing plans to connect its new Houston terminal to Magellan Midstream Partners' terminal and distribution network.
- On Keystone XL - the northern leg from Canada to Oklahoma - Miller says the company remains committed, since TRP has the "full backing of our shippers."
Apr. 20, 2015, 12:21 PM
- Enbridge (NYSE:ENB) wants to build the 730-mile Northern Gateway pipeline to ship Canadian oil to west coast port, but the chief of a reserve for indigenous people is promising to block the project running alongside the reserve’s territory.
- The pipeline is meant to help ship oil to Asia, but the Tl’azt’en nation and other indigenous communities have been emboldened by a recent Supreme Court of Canada decision on aboriginal land rights to fight a project they say risks damaging their environment and culture.
- Aboriginal groups and environmental protesters also have challenged an expansion of Kinder Morgan’s (NYSE:KMI) Trans Mountain pipeline outside Vancouver, as well as TransCanada's (NYSE:TRP) proposed Energy East pipeline that would ship crude from Alberta to the Atlantic.
Apr. 17, 2015, 10:59 AM
- Quebec needs more evidence from TransCanada (TRP +0.1%) that its Energy East pipeline will benefit the province after a marine terminal was scrapped from the plan, says Energy and Natural Resources Minister Pierre Arcand.
- While the company argues the proposed C$12B line crossing Quebec to reach the Atlantic would create jobs and boost the local economy, Arcand is not convinced, saying "Are you going to open an office in Montreal? What are you going to bring to us? And we have yet to get those answers."
- CEO Russ Girling says the project’s benefits to Quebec include jobs tied to C$5B of spending in the province on building the pipeline and at least 10 pumping stations, maintenance on the infrastructure and taxes paid to Quebec municipalities along the route amounting to C$2B over 20 years.
Apr. 16, 2015, 12:45 PM
- TransCanada (TRP -0.1%) says Canada's National Energy Board issues a report recommending the federal government approve its proposed $1.7B North Montney Mainline project.
- TRP says the initial capacity of North Montney Mainline will allow the shipment of ~2.4B cf/day of natural gas, and that Petronas subsidiary Progress Energy Canada has contracted for 2.1B cf/day of firm delivery service.
TransCanada Corp. provides gas storage and related services. It operates as an energy infrastructure company in North America. The company operates its business through three segments: Natural Gas Pipelines, Liquid Pipelines and Energy. TransCanada was founded on May 15, 2003 and is... More
Industry: Gas Utilities
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