TransCanada: Blue-Chip Canadian Pipeline Company At A Depressed Valuation
Thomas Lott • 35 Comments
Thomas Lott • 35 Comments
Mon, May 16, 3:45 PM
- TransCanada (TRP +2.1%) says it plans to replace sections of its Keystone pipeline in Nebraska, South Dakota, Kansas, Illinois and Missouri that have been found to not meet federal strength standards so the company can begin pumping oil at higher pressure.
- The move could mean more money for TRP, says Richard Kuprewicz of the Accufacts pipeline industry consulting company: TRP "can run it at higher flows, and higher flows means more profit."
- Separately, TRP says CFIUS has cleared its acquisition of Columbia Pipeline (CPGX +0.2%); the companies continue to expect to complete the transaction in H2 2016.
Mon, May 9, 3:19 PM
- Crude oil prices erased all of Friday's gains and more, as June futures ended the pit session 2.7% lower to $43.55/barrel even as the massive wildfires in the heart of Canada's oil sands continue to spread, albeit more slowly.
- But positioning in the oil market is very stretched, and analysts say speculators already hold the largest number of wagers for a rise in WTI futures since last summer and near-record high bullish bets on Brent, so the scope for further gains was limited without more clarity on the extent of damage to oil facilities or supply outages.
- The sacking of Ali al-Naimi as head of Saudi Arabia’s oil ministry also may be a reason why oil prices failed to maintain early gains, as successor Khalid al-Falih, the former head of Aramco, is expected to follow the strategy of protecting the country’s market share.
- Yesterday, Cnooc’s Nexen (NYSE:CEO) operations to the south of Fort McMurray reportedly suffered minor damage, while Suncor (NYSE:SU) says its facilities have not been damaged and is beginning to implement a plan for a return to operations.
- Other relevant tickers: RDS.A, RDS.B, XOM, IMO, COP, OTCPK:HUSKF, OTCPK:ATHOF, CNQ, CVE, OTCPK:MEGEF, ENB, OTCPK:IPPLF, OTC:KEYUF, TRP, PSX, STO
- ETFs: USO, OIL, UWTI, UCO, DWTI, SCO, BNO, DBO, DTO, UGA, USL, DNO, OLO, UHN, SZO, OLEM
- Now read Fort McMurray situation getting better - oil markets daily
Tue, Apr. 12, 12:35 PM
- Canadian PM Trudeau has told his senior lieutenants to make TransCanada's (TRP +0.5%) Energy East pipeline and Kinder Morgan's (KMI +5.2%) Trans Mountain expansion in British Columbia a top government priority, according to a National Post report.
- Trudeau has been convinced by Finance Minister Morneau and other influential voices that the pipelines must be built to achieve the ambitious economic growth targets his government has set, the report says.
- The first test of the new policy will be KMI's Trans Mountain application, which has been reviewed by the National Energy Board with a final decision pending before being passed on to Trudeau's cabinet; NEB hearings into Energy East have not yet started.
- Now read The day Kinder Morgan stood still
Fri, Apr. 8, 3:28 PM
- TransCanada (TRP +2.9%) wins an auction to develop and operate a natural gas pipeline in central Mexico, beating a subsidiary of Sempra Energy (SRE +0.6%) that was disqualified from bidding.
- TRP unit Transportadora de Gas Natural de la Huasteca wins the auction with a $336M bid, despite TRP's plans to sell as much as 49% of its Mexican assets.
- Meanwhile, a bid from SRE's Ienova unit was thrown out for the third time since mid-March for failing to meet requirements to operate the pipeline.
- The 261-mile pipeline project is expected to begin operation in early 2018.
- Now read Keystone pipeline spill in South Dakota bigger than first thought
Fri, Apr. 8, 10:36 AM
- TransCanada (TRP +2%) says ~400 barrels of oil leaked near the Keystone pipeline in South Dakota, far more than the 125 barrels the company originally estimated.
- TRP still has not said what caused the leak, which was reported Saturday; it does say the leak poses no threat to the environment or to public health.
- The company reportedly has told customers the pipeline will remain closed until early next week.
- The shutdown contributed to a drop of more than 480K barrels at the Cushing, Okla., delivery point for U.S. crude futures in the five days to Tuesday, according to Genscape data.
- Now read Spending in Canada's energy sector suffers record drop
Wed, Mar. 30, 3:45 PM
- TransCanada (TRP +3.5%) is upgraded to Buy from Neutral with a $55 price target, raised from $50, at Citigroup after the company's moves to reduce the cyclical nature of its earnings.
- Citi analyst Faisel Khan sees "the potential for a re-rating of the stock" following TRP's solid entry point into Columbia Pipeline and an upcoming sale of its power assets, which the firm estimates could fetch as much as $4B; meanwhile, the 49% stake in TRP's Mexican natural gas pipelines could attract ~$2B.
- Khan also notes that TRP trades at one of the lower 2018 P/E multiples among large-cap pipelines and utilities.
Fri, Mar. 18, 3:55 PM
- Columbia Pipeline Group (CPGX +5.9%) has surged today following TransCanada's (TRP -1.2%) $25.50/share takeover offer - no surprise there - but Columbia Pipeline Partners (CPPL -18.5%), CPGX's MLP, is trading nearly 20% lower.
- TRP said little about its plans for the MLP except that it would become the new general partner and own 46% of the units; TRP already has its own MLP - TC Pipeline (TCP -2.2%) - so its course for the Columbia partnership lacks clarity.
- Investors may be worried that TRP will buy up the MLP cheaply, leaving them on the hook for capital gains taxes that would cut into their returns, Hennessy Gas Utility Fund manager Skip Aylesworth tells Bloomberg.
- Barclays downgrades CPPL to Equal Weight from Overweight with a $15 price target, forecasting slower growth in the MLP’s investor payout under TRP’s control.
Thu, Mar. 10, 12:52 PM
- TransCanada (TRP -4.3%) responds to media reports suggesting a potential acquisition of Columbia Pipeline, saying it is in discussions with a third party but no agreement has been reached.
- Dow Jones reported about an hour ago that TRP and Columbia Pipeline (CPGX +15.8%) were in merger talks; TRP is just now coming off a trading halt, while CPGX continues to climb.
- A deal for CPGX would give TRP significant natural gas assets in the northeastern U.S.
Thu, Mar. 10, 11:44 AM
- TransCanada (TRP -3.6%) is in takeover talks with Columbia Pipeline (CPGX +12.9%), with a deal potentially announced in the coming weeks, WSJ reports.
- With a typical takeover premium and including CPGX’s nearly $3B debt load, a deal could be worth well in excess of $10B, according to the report.
- The role of Columbia Pipeline Partners (CPPL +2.5%) in any possible deal is not known.
Thu, Feb. 11, 12:27 PM
- TransCanada (TRP -1.7%) is lower despite reporting better than expected Q4 adjusted earnings and raising its dividend at a time when most energy companies are cutting back shareholder payouts.
- TRP took a C$2.9B Q4 charge related to the Keystone XL pipeline, coming in at the upper range of the C$2.5B-C$2.9B charge the company had said it expected to take on the C$4.3B carrying value of Keystone and its related projects.
- TRP posted an unadjusted Q4 loss of $2.5B compared with a $458M profit in the year-ago quarter.
- "While we were extremely disappointed by the denial of a Presidential Permit for Keystone XL, we are well positioned to continue to grow earnings and cash flow in the years ahead," CEO Russ Girling says.
- TRP says it is planning C$13B of "near-term growth opportunities," which it expects will be in service by 2018, and says it continues to expect its dividend to increase at an average annual rate of 8%-10% through 2020.
Fri, Feb. 5, 3:11 PM
- Canada’s government will make a decision by the end of this year on Kinder Morgan’s (KMI -1.3%) Trans Mountain oil pipeline expansion after additional consultations and considering the country’s national interest, Natural Resources Minister Jim Carr says.
- The government has added four months to the National Energy Board regulatory process in order to provide more assessment of the project, Carr says; TransCanada’s (TRP -1.3%) Energy East also will face a longer review period, while Enbridge’s (ENB -2.7%) Northern Gateway was approved by the previous government but the company has not yet made a final investment decision.
- "When we’re done, we want Canadians to be heard, that it was a responsible and thorough process which we hope will lead to a better result... We are not asking the proponents of these prjects to go back to square one," Carr says.
Tue, Jan. 26, 10:58 AM
- Canada’s new pipeline rules will consider the impact of greenhouse gas emissions, including upstream emissions, and will be unveiled soon, Prime Minister Trudeau says, adding that projects need to win public trust to move forward.
- Trudeau spoke in Montreal today alongside Mayor Coderre, who announced his opposition last week to TransCanada’s (TRP +3.7%) Energy East proposal, sparking criticism from other Canadian political leaders.
- Coderre says he is leaving the door open to Energy East by suggesting it was still possible to strike the right balance.
- Trudeau’s government is preparing "transition plans” for existing proposals, such as Energy East and Kinder Morgan’s (KMI +1.2%) Trans Mountain pipeline expansion, allowing them to adhere to a new, higher environmental review standard without restarting the lengthy application process.
Fri, Jan. 22, 2:27 PM
- Kinder Morgan’s (KMI +10.6%) proposed Trans Mountain pipeline expansion is set to face another regulatory hurdle when Prime Minister Trudeau's government moves to strengthen environmental review laws and give new marching orders to the National Energy Board in the coming weeks.
- The regulatory overhaul leaves timelines for the $5.4B project in limbo; hearings resumed for the project this week and an NEB decision is due in May under the old review system, and no one quite knows the meaning of the review process when changes are in the offing.
- The plans effectively would add regulatory requirements on proposed projects already under review in Canada, such as Trans Mountain and TransCanada's (TRP +5%) Energy East pipeline, to meet an unannounced higher standard favored by Trudeau without restarting the process entirely.
- An extended regulatory process would be another setback for KMI, which first proposed its pipeline expansion in 2013 and already has faced two delays.
Fri, Jan. 22, 2:12 PM
- Ontario Premier Wynne gives tentative backing of TransCanada's (TRP +4.8%) $15.7B Energy East pipeline, offering Alberta Premier Notley some support a day after Montreal-area mayors expressed opposition to Energy East and the Alberta government’s pipeline strategy.
- In a joint news conference in Toronto, Wynne praised Notley for Alberta’s climate change plan, and "appreciate(s) that there is a need for a way to get Canadian oil, that is allowed under Alberta’s new emission cap, to overseas markets."
- At the news conference, Notley criticized Montreal Mayor Coderre as short-sighted and touted the pan-Canadian economic benefits of Energy East, adding that "a pipeline is the safest way, the most efficient way" to ship oil.
Fri, Jan. 22, 12:46 PM
- With its Keystone XL project rejected by the U.S., TransCanada (TRP +4.7%) is pursuing more modest developments in the U.S. Gulf coast to make inroads in the oil refinery complex.
- TRP’s US$600M Houston Lateral pipeline and tank terminal connecting the existing Keystone pipeline system to refineries in Houston is set to come on stream by Q2, liquids pipeline president Paul Miller tells Financial Post.
- To bolster the Houston Lateral’s connection to Gulf coast markets, TRP and Magellan Midstream Partners are building a US$50M pipeline to ship 200K bbl/day between TRP's under-construction Houston terminal and MMP’s East Houston terminal.
- "It’s small from a dollar perspective, but it’s hugely significant from a connectivity perspective, providing connectivity to both the Houston and the Texas City refineries,” Miller says, adding that TRP is planning similar smaller projects either through acquisitions or greenfield developments around the Gulf coast.
Thu, Jan. 21, 12:54 PM
- Mayors from the greater Montreal area have come out against TransCanada's (TRP +5.6%) proposed Energy East pipeline, deciding the environmental risks far outweigh any economic benefits for the region, Financial Post reports.
- Montreal Mayor Coderre, current president of the Montreal Metropolitan Community, which represents 82 jurisdictions, says the pipeline would be worth ~$2M/year in economic benefits to the area, while a major oil spill cleanup could cost $1B-$10B.
- TRP’s planned $15.7B pipeline would transport crude from the Alberta oil sands to a terminal in New Brunswick before exporting it to overseas customers.
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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