TransCanada: Blue-Chip Canadian Pipeline Company At A Depressed Valuation
Thomas Lott • 35 Comments
Thomas Lott • 35 Comments
Dec. 1, 2014, 10:11 AM
- Canadian Natural Resources (CNQ -0.9%) Chairman Murray Edwards predicted Friday that oil prices could collapse to US$30/bbl before stabilizing at $70-$75.
- Edwards says industry projects that are already underway, particularly oil sands projects with a long-term horizon and capital already invested, likely will continue, but others will be shelved until there is more clarity around future oil prices; Edwards also sees a slowdown in conventional oil projects, especially those that tend to produce a lot at the front end.
- He expects efforts to build new pipelines such as Keystone XL (TRP +0.6%) and Energy East (ENB +0.8%) to continue because they represent a 30-50 year opportunity for Canada.
- Brace for such “apocalyptically low” oil calls now, Jason Zweig writes: “Watch for the last optimists to be swept away by pessimism - at which point it will be an opportune time to add to your energy stocks or MLPs... We’re probably not there yet."
Nov. 20, 2014, 5:16 PM
- TransCanada's (NYSE:TRP) proposed Energy East pipeline, which would link Alberta's oil sands to the Atlantic coast, faces another obstacle as Quebec's provincial government requires the project to meet seven new conditions before allowing construction.
- Among the new requirements are that the project be subject to an environmental assessment, and TRP must guarantee an emergency plan in case of a spill, consult with communities including aboriginal groups along the route and ensure the project doesn’t reduce Quebec’s gas supply.
- The C$12B crude oil pipeline would be North America’s largest, stretching 4,600 km (2,859 miles) between Alberta and New Brunswick to ship 1.1M bbl/day.
Nov. 19, 2014, 6:57 PM
- TransCanada (NYSE:TRP) CEO Russ Girling fired back at Keystone pipeline opponents and Pres. Obama during the company's investor day, saying that describing the controversial project as an export pipeline is “pure fabrication.”
- Crude oil is part of a global market, and given that there are 4.5M barrels of oil imported to the Gulf Coast every day, Girling said describing Keystone XL as an export pipeline “doesn’t make any sense."
- Girling is not giving up on the project, saying “The marketplace need for Keystone has probably grown... Our 20-year shipper contracts remain in place. Not one of those shippers has given up their capacity.”
- Last week, Pres. Obama called the project a Canadian export pipeline that would not benefit Americans or help lower U.S. gasoline prices.
Nov. 19, 2014, 3:28 PM
- Despite coming up just short in yesterday's U.S. Senate vote on the Keystone pipeline, Credit Suisse upgrades TransCanada (TRP +2.4%) to Outperform from Neutral with a price target raised to C$68 from a prior C$58, noting that TRP's asset base is well positioned for several investment themes including Alberta's oil sands and west coast liquefied natural gas shipments.
- The firm continues to believe TRP's "journey to a more capital efficient model will be evolutionary rather than revolutionary," comparing the company's ascendance to Aesop's Tortoise and the Hare fable.
- The firm adds that TRP has a low-cost generation exposure in "structurally tight" power markets.
Nov. 19, 2014, 8:44 AM
- Pres. Obama may consider using the Keystone pipeline as leverage with Republicans if they cooperate on other aspects of his domestic agenda, according to news reports.
- With the Senate's narrow defeat of a Keystone bill yesterday, Obama avoided the awkward position of possibly vetoing a bill supported by several Democrats, but the issue is sure to come up again after the new year when Republicans take control of both houses of congress.
- TransCanada (NYSE:TRP) also says it expects its dividend to grow at least 8%/year through 2017; the company is holding its investor day today.
- TRP -1.1% premarket.
Nov. 18, 2014, 6:29 PM
- The U.S. Senate falls one vote short in its attempt to approve construction of the Keystone XL pipeline (NYSE:TRP), ending prospects for such legislation this year.
- A total of 59 senators voted for the measure and 41 voted against it, but the bill required 60 votes for passage.
- Louisiana Sen. Mary Landrieu had pushed for the vote to boost her chances in her Dec. 6 runoff election.
Nov. 18, 2014, 2:42 PM
- TransCanada (TRP -1.2%) CEO Russ Girling wades back into the Keystone XL pipeline debate, firing back at Pres. Obama's claims last week that the pipeline would only benefit Canada and would not help reduce gasoline prices in the U.S.
- “We put 9,000 Americans to work building the first two phases of the pipeline back in 2009/2010, we hired another 5,000 to build the southern leg of the project two years ago, and we want to put 9,000 more Americans to work to finish what we started," Girling says.
- A Senate vote is expected today on a bill that would call for Keystone’s immediate approval, but would need Obama's signature to become law.
Nov. 18, 2014, 10:45 AM
- The Edelman public relations firm outlined a plan to investigate groups that had opposed TransCanada's (TRP -0.2%) Energy East pipeline, and urged the company to develop its own sympathetic supporters and spread any unflattering findings about the opposition, according to a New York Times report.
- TRP says it did investigate opponents and their claims and followed Edelman's advice to create a network of allies, but rejected what critics call other dirty tricks recommended by the PR firm.
Nov. 17, 2014, 2:15 PM
- Sen. Landrieu and other supporters of a bill to force approval of TransCanada's (TRP +2.3%) Keystone XL pipeline appear to be one vote short of the 60 needed for tomorrow’s vote.
- Aides to three Senate Democrats whose votes have been courted by Keystone supporters said today that the lawmakers - Coons of Delaware, Klobuchar of Minnesota and Udall of Colorado - would oppose the bill.
- Among senators still being courted are King of Maine, an independent who caucuses with Democrats, and Democrat Johnson of South Dakota.
- The House last Friday passed an identical bill 252-161, with support from 31 Democrats.
Nov. 17, 2014, 7:57 AM
- Hedge fund Sandell Asset Management will urge TransCanada (NYSE:TRP) to overhaul its business strategy by taking better advantage of an affiliate that pays no taxes, and will call on the company to weigh a spinoff of its power business, NYT's Dealbook reports.
- While the exact size of the hedge fund’s stake is unclear, Sandell reportedly plans to say it has a “significant” stake in TRP.
- Sandell is expected to argue that TRP is not taking full advantage of its MLP affiliate, and that the company should either put all of its oil and gas assets into the partnership or at least set a schedule of dropdowns of assets into the MLP.
- The hedge fund also thinks TRP should study a potential spinoff of its power unit, which it believes is in a much more volatile business that muddies the valuation of the overall company.
- TRP +0.8% premarket.
Nov. 14, 2014, 1:11 PM
- The Republican-led House passes the Keystone pipeline bill (TRP +0.2%), as expected, with a Tuesday vote upcoming in the Senate, which is still controlled by Democrats until January; if approved there, the bill would go to Pres. Obama, who says more time is needed to study the project.
- A Bloomberg report says the long delays to the pipeline are providing little obstacle to western Canadian oil producers - such as Suncor Energy (NYSE:SU), Imperial Oil (NYSEMKT:IMO) and Canadian Natural Resources (NYSE:CNQ) - in getting their crude to the U.S. Gulf coast, with shipments set to more than double next year.
- “Keystone is kind of old news,” says the director of energy analytics at RBN Energy. “Producers have moved on and are looking for new capacity from other pipelines.”
Nov. 14, 2014, 10:49 AM
- Pres. Obama offered his most pointed comments about the proposed Keystone XL pipeline (TRP -0.8%), signaling a coming confrontation with Republicans as they try to force approval of the pipeline.
- “Understand what this project is: It is providing the ability of Canada to pump their oil, send it through our land down to the Gulf where it will be sold everywhere else. It doesn't have an impact on U.S. gas prices,” Obama said today during a visit to Myanmar.
- “I have to constantly push back against this idea that somehow the Keystone pipeline is either this massive jobs bill for the United States or is somehow lowering gas prices," the president added.
Nov. 13, 2014, 2:38 PM
- The House of Representatives appears set to vote tomorrow on a bill to approve the Keystone XL (TRP -1.5%) oil pipeline, and the Senate could take up a bill as soon as next Tuesday, but questions around the economic viability of the project are mounting as oil prices move lower.
- "Anything not under construction [is] at risk of being delayed or canceled altogether," says research Canadian Energy Research Institute VP Dinara Millington; the Alberta oil sands, which the proposed pipeline would carry to Nebraska en route to refineries on the Gulf coast, would cost $85-$110 to produce, depending on which drilling technology is used.
- The situation is somewhat similar to one faced in 2007 when a proposed natural gas pipeline from Alaska to the Midwest was never built because newly discovered gas supplies in the lower 48 states pushed prices down by two-thirds.
Nov. 12, 2014, 6:57 PM
- Utility stocks tumbled today amid Pres. Obama's plan with China to curb greenhouse gas emissions, and will renew a push by environmental activists to deny government approval of pipeline projects such as Keystone XL (NYSE:TRP) and Alberta Clipper (NYSE:ENB) that would carry Canadian oil sands crude to U.S. refineries.
- “Achieving these goals will almost certainly require changes to the implementation of the EPA power plant regulations,” Council on Foreign Relations analyst Michael Levi says, referring to draft rules issued by the EPA in June that already have sparked pushback.
- Congressional Republicans, soon to have a majority in the Senate in addition to the House, promise to do everything possible to stop Obama’s emissions targets for power plants; the administration believes GOP gains mean Obama will not get legislative help in achieving his goals but that Republicans are unlikely to be able to stop executive orders and environmental regulations.
- ETFs: XLU, IDU, VPU, UPW, RYU, FUTY, FXU, SDP
Nov. 12, 2014, 5:47 PM
- TransCanada (NYSE:TRP) pushed higher near today's close following reports that the Keystone XL pipeline bill will be brought up in the U.S. House tomorrow.
- While Louisiana Sen. Landrieu argued on the Senate floor today for a vote to approve the pipeline, the House says it will forward a Keystone bill sponsored by Rep. Cassidy, Landrieu’s opponent in a Dec. 6 runoff election.
- The House is likely to approve the pipeline, while prospects in the Senate - where 60 votes are needed to pass the legislation, and Democrats are still in the majority until January - are less certain.
Nov. 11, 2014, 4:37 PM
- Senate Democrats are considering voting in the lame-duck session to force approval of the Keystone XL pipeline (NYSE:TRP), Bloomberg reports, citing a Democratic aide.
- The report said specific language has not been discussed but the vote would be held to help Sen. Mary Landrieu, who faces a runoff against Rep. Bill Cassidy in a Dec. 6 runoff election.
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
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