Pipeline demand powers $1B profit

CALGARY • Higher volumes from its growing stable of oil and gas pipelines in the United States and Canada drove improvements in fourth-quarter earnings,

TransCanada Corp. reported Thursday.

Oil and gas production growth in the U.S. and full oil pipelines in Alberta — where the provincial government has enacted production cuts to free up pipeline space and draw down overflowing storage — helped drive net income to $1.09 billion, the Calgary-based company said.

That translated to $1.19 per diluted share for the quarter ended Dec. 31, compared with a profit of $861 million or 98 cents per diluted share for the same quarter a year earlier.

“We continue to realize the growth expected from our industry-leading capital expansion program as we place new long-term contracted and rate-regulated assets into service,” said CEO Russ Girling on a conference call.

“Simply, the demand for our infrastructure remains strong, driving historically high utilization rates across our systems. That, combined with new assets entering service, resulted in record earnings and cash flow for 2018.”

For the year, TransCanada had net income attributable to common shares of $3.54 billion, versus just under $3 billion in 2017, as revenue rose to $13.68 billion from $13.45 billion.

Revenue was $3.91 billion in the fourth quarter, up from $3.62 billion in the last three months of 2017.

TransCanada also announced Thursday it would raise its quarterly dividend to 75 cents from 69 cents per share, representing its 19thconsecutive annual increase.

Comparable earnings for the quarter amounted to $1.03 per share, up from 82 cents per share a year earlier, beating analyst consensus expectations of 96 cents, according to Thomson Reuters Eikon.

TransCanada also said that if it doesn’t get the ruling it wants in Montana to allow construction of the long-delayed Keystone XL project, the company will pursue further appeals in higher courts but potentially lose the coming summer construction season.

A series of legal challenges have already pushed back TransCanada’s plans to ramp up construction work on the US$8-billion Keystone XL pipeline and, if they persist, could lead to construction work being further delayed until after this year.

“It’s uncertain at this time when we’ll have these regulatory hurdles behind us,” TransCanada executive vice-president of liquids pipelines Paul Miller said of legal challenges in Nebraska and Montana. Miller said the company is working to resolve lawsuits and begin construction this summer to hit an “optimal” work window.

“There will come a point where, because of the desired optimal construction program, we will lose 2019. We’re not at that point yet,” he said.