TransCanada: Blue-Chip Canadian Pipeline Company At A Depressed Valuation
Thomas Lott • 35 Comments
Thomas Lott • 35 Comments
Nov. 24, 2015, 12:49 PM
- Canadian oil producers may say they are on board with Alberta’s new climate change policy goals, but the requirement that companies reduce their methane emissions by 45% will add costs "in the tens or hundreds of millions of dollars over the next five years," the Canadian Association of Petroleum Producers says.
- Alberta’s oil and gas sector produced 30.4 megatons of methane emissions in 2013, accounting for 70% of the province’s overall methane emissions.
- National Bank Financial analyst Kyle Preston calls Alberta’s climate change policy “fair and accommodating” for oil and gas companies, and says newer energy projects such as Canadian Natural Resources' (NYSE:CNQ) Horizon oil sands project and MEG Energy’s (OTCPK:MEGEF) Christina Lake facility emit less greenhouse gas than older facilities, which will be hit harder by the new policies.
- Other related tickers: TRP, ENB, IMO, XOM, RDS.A, RDS.B, OTCQX:COSWF, OTCPK:HUSKF, CVE
Nov. 24, 2015, 11:30 AM
- Analysts are betting that renewable energy developers such as Enbridge (ENB +1.2%) and TransCanada (TRP +1.9%) will be among the best placed to make the shift to Alberta's new carbon policies, Bloomberg reports.
- As the government boosts the province’s share of renewable electricity to 30% from 9% by 2030, "renewable power contracts are going to go to the bidder that needs the least amount of government support, developers with most financial flexibility and overall lowest cost of capital” such as ENB and TRP, says National Bank Financial's Patrick Kenny.
- The two companies already are among Canada’s largest renewable power operators: ENB owns 2,065 MW of wind power across Canada, enough to power 650K homes, while TRP operates wind, hydro and nuclear plants as part of its 11.8K MW of power generation.
- TransAlta (TAC -2%) surged 9.5% yesterday as investors felt Alberta's new policy avoided the worst-case fastest potential phase-out of coal plants.
- Earlier: TransAlta +12% on Alberta climate change plan (Nov. 23)
Nov. 23, 2015, 8:19 AM
- Alberta's government announces plans to cap oil sands emissions for producers, phase out coal power plants and implement a carbon tax in an effort to curb pollution.
- The provincial government in impose a limit of 100 megatons/year of carbon emissions, above current annual emissions of ~70 megatons, phase out coal power plants by 2030, and set a carbon price of C$20/metric ton (US$15) by 2017 which rises to C$30 in 2018.
- The Canadian Association of Petroleum Producers supports the initiative, saying it could help improve Alberta’s image in markets to which oil sands producers hope to expand access.
- "This will create a wealth of opportunities and jobs for generations to come. We in Alberta want to take a leadership role on climate," says Suncor (NYSE:SU) CEO Steve Williams.
- Coal producers criticized the new policy, however, saying it will raise electricity costs in Alberta and cost Canadian jobs.
- Other relevant tickers: TRP, ENB, IMO, XOM, RDS.A, RDS.B, OTCQX:COSWF, OTCPK:HUSKF, CVE, CNQ
Nov. 20, 2015, 10:55 PM
- TransCanada (NYSE:TRP) says it has halted construction of a natural gas pipeline after getting an order from Canadian regulators prompted by the release of drilling fluids into the Athabasca River in Alberta.
- The National Energy Board issued its safety order following four separate incidents involving the unintended release of the fluids into the river during late October and early November.
- The order involves construction for TRP’s McDermott Extension natural gas pipeline expansion, part of a C$44M project expected to start up April 1, 2016.
Nov. 18, 2015, 7:13 PM
- TransCanada (NYSE:TRP) is the latest Canadian energy producer to announce new job cuts, but does not say how many jobs are being lost or what parts of the business are bearing the brunt.
- TRP says it is taking action to remain competitive and that it plans to pursue its projects "more efficiently and strategically," less than two weeks after Pres. Obama rejected its Keystone XL pipeline.
- TRP already announced a series of cuts during recent months affecting more than 200 employees and contractors, including some senior management.
- Earlier this week, fellow pipeline company Enbridge announced it would cut 500 jobs and leave 100 more vacant positions unfilled.
Nov. 18, 2015, 12:47 PM
- TransCanada (TRP +0.1%) says it is withdrawing its application with Nebraska regulators for approval of the Keystone XL pipeline, less than two weeks after Pres. Obama rejected the project.
- TRP tells Bloomberg that it would be inappropriate for the Nebraska Public Service Commission to move forward with a review of the route in the state while the company considers its next steps.
- TRP says the project continues to have the support of shippers, labor groups and others.
Nov. 17, 2015, 11:46 AM
- Pres. Obama’s characterization of Canadian oil as "dirty" amid his rejection of TransCanada's (TRP +0.4%) Keystone XL pipeline is the fault of Canada’s inaction on environmental issues, new PM Trudeau says.
- "A less aggressive approach on environmental responsibility in the past led to a ramping up of rhetoric against Canadian oil and against Canadian energy," Trudeau said when asked about Obama’s comments; the two will meet later this week in the Philippines.
- Among various subjects, Obama and Trudeau plan to discuss carbon emissions pledges ahead of the UN climate conference later this month.
- Trudeau is being criticized by political rivals for not adequately responding to Obama’s comments.
Nov. 17, 2015, 10:29 AM
- TransCanada (TRP +0.7%) says it is sticking with a plan to increase investor payouts by 8%-10% annually through 2020 even after the rejection of the Keystone XL pipeline.
- TRP says the dividend growth is supported by $10.8B worth of small to medium-sized pipelines and power generation facilities expected to start up by 2018; altogether, TRP plans to undertake projects worth $36.7B.
- "They have the cash flow right now to do these smaller projects,” says an analyst at Leon Frazer. “Then we’ll wait to see what happens with these larger ones.”
Nov. 16, 2015, 3:39 PM
- TransCanada (TRP +2.8%) says its NOVA Gas Transmission subsidiary has signed firm contracts for 2.7B cf/day of natural gas transportation service that will require a $570M system expansion for 2018.
- TRP says growth in northwestern Alberta and northeastern British Columbia are the primary drivers for the new contracts.
- TRP says the expansion will increase its overall investment on the NGTL system beyond the already announced $7.5B of projects, of which ~$2.8B have received regulatory approval, with $800M under construction and an additional $1.7B of facilities under regulatory review.
Nov. 13, 2015, 7:15 PM
- The president of Kinder Morgan's (NYSE:KMI) Canadian unit, Ian Anderson, tells Bloomberg he is seeking to find common ground with opponents to the company's proposed C$5.4B Trans Mountain pipeline expansion, including Burnaby mayor Derek Corrigan, one of the project's more vociferous opponents.
- Canada’s oil industry has turned its attention to the Trans Mountain pipeline, which already ships Alberta crude to the port of Vancouver, as well as Enbridge's (NYSE:ENB) Northern Gateway and TransCanada’s (NYSE:TRP) Energy East after Keystone XL was rejected by the U.S. last week.
- Shipments from Trans Mountain now account for as much as 4% of Port Metro Vancouver traffic, and Anderson says an expansion would boost that to as much as 8%.
- Canada’s federal government announced today that it would make good on a promise to ban tankers on the northern Pacific coast, which would affect Northern Gateway but not Trans Mountain; environmental opponents to Trans Mountain are pushing for a similar measure in southern coastal waters.
Nov. 12, 2015, 7:11 PM
- Hard-hit Canadian energy producers, coming off a bleak Q3 earnings season, are signaling they will cut capital spending for a second straight year in 2016, Reuters reports.
- The seven biggest Canadian producers cut 2015 capital spending by 39%, or a combined C$12B, from last year, and Eric Nuttall, portfolio manager at Sprott Asset Management, expects another 10%-20% reduction for 2016.
- Of the seven, so far only Cenovus Energy (NYSE:CVE) and Canadian Natural Resources (NYSE:CNQ) have outlined 2016 budgets; CVE estimates 2016 capex of C$1.5B-C$2B vs. C$1.8B-$1.9B in 2015, and CNQ expects to spend C$4.5B-C$5B next year from C$5.44B in 2015.
- Encana (NYSE:ECA) today bucked the trend a bit by speeding up investment in the U.S. Permian Basin this year but is using capital originally earmarked for 2016; the company suggested in its earnings conference call that 2016 spending will be carefully controlled.
- Also: SU, TRP, ENB, IMO, OTCPK:HUSKF
Nov. 11, 2015, 10:57 AM
- TransCanada (TRP -2.2%) says it has been awarded a contract to build, own and operate the Tuxpan-Tula pipeline in Mexico.
- TRP says it expects to invest ~$500M in the pipeline and anticipates an in-service date in Q4 2017.
- The pipeline’s construction is backed by a 25-year natural gas transportation service contract with Mexico’s state-owned power company.
Nov. 7, 2015, 8:25 AM
- With Keystone XL nixed by Pres. Obama, the Canadian energy industry - and its opponents - are turning their attention to the three pipelines proposed to carry oil sands volumes from Alberta to Canada’s Pacific and Atlantic coasts and avoid crossing into the U.S.
- Alberta believes Kinder Morgan’s (NYSE:KMI) Trans Mountain expansion to the Pacific and TransCanada’s (NYSE:TRP) Energy East line to the Atlantic have the best chances for success, while Enbridge’s (NYSE:ENB) Northern Gateway is seen as less likely because of strident local opposition.
- ENB also has been waiting since 2012 for a U.S. decision on a permit to nearly double the capacity of its Alberta Clipper cross-border pipeline, but the company notes the existing line is already fully operating and was permitted in 2009.
- Analysts say the Keystone denial will embolden opponents, making all pipelines more difficult to build, and is a blow not just to Canadian companies but to U.S. pipeline firms such as Plains All American (PAA, PAGP) and Energy Transfer (ETE, ETP, SXL) that already are delaying projects (I, II) in response to lower oil prices and tougher environmental reviews.
- Meanwhile, a major beneficiary could be Venezuela, who produces heavy crude similar to Canada’s oil sands and whose economy relies largely on shipping it to the same U.S. Gulf coast refineries that Keystone was meant to supply.
Nov. 6, 2015, 2:30 PM
- TransCanada (TRP -5.9%) says it will review all options, including seeking a new permit to ship crude oil from Canada to the U.S., following Pres. Obama's rejection of the proposed Keystone XL pipeline.
- The 1,179-mile pipeline would not have lowered U.S. gas prices, made long-term contribution to U.S. jobs, or made the U.S. less dependent on foreign energy, Obama said today at the White House.
- American Petroleum Institute president Jack Gerard worries that the rejection will have a chilling effect on other energy infrastructure projects, and says the decision will not stop production of crude oil from Canada’s tar sands - instead of being transported by pipeline, it will be shipped by train and barge, which would create more greenhouse gas emissions than the pipeline.
- "This is all environmental politics," says Oppenheimer energy analyst Fadel Gheit. "It doesn't make any economic sense to block a pipeline that will create an enormous amount of wealth to certain areas of the country [and] for Canada."
Nov. 6, 2015, 11:10 AM
- A press conference has been set for 11:45 this morning, in which Pres. Obama reportedly will announce the rejection of TransCanada's (TRP -5.3%) proposed Keystone XL pipeline.
- After seven years of delaying a final decision, Obama is expected to cite the urgency of climate change as a key reason behind his decision.
- Earlier this week, the U.S. State Department denied the company's request to suspend its permit application.
- Earlier: WSJ: Keystone pipeline rejection may come this week (Nov. 5)
Nov. 6, 2015, 8:15 AM
- TransCanada (NYSE:TRP) agrees to sell a 49.9% interest in Portland Natural Gas Limited Partnership its TC PipeLines (NYSE:TCP) MLP for $223M.
- PNGTS is a 295-mile interstate natural gas pipeline that connects with the TransQuebec and Maritimes Pipeline at the Canadian border near East Hereford, Quebec and delivers natural gas to customers in the U.S. northeast.
- TRP will continue to own an 11.8% interest in PNGTS.
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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