National Post (National Edition)
New TC Energy CEO may signal strategy shift
CALGARY • Pipeline giant TC Energy Corp. is getting a new chief executive officer and, analysts believe, a potentially redefined growth strategy for the future.
TC Energy, formerly known as TransCanada, said Monday long-time president and CEO Russ Girling is retiring and will be replaced by François Poirier, the current chief operating officer and president of the company's power and storage and Mexican business units on Feb. 28, 2021.
The choice of Poirier may signal that the pipeline giant, which operates Canada's largest natural gas pipeline network, will eye growth in the power and storage business, analysts say.
Renewable power companies are enjoying greater investor interest than oil and gas mid-stream companies. However, no one is expecting a dramatic shift in the short term.
“A key focus for investors going forward is how this change will impact TRP's corporate strategy,” wrote Ian Gillies, analyst at Stifel FirstEnergy. “One interesting item is that Mr. Poirier has had significant involvement in TRP's power business (including renewables), which could suggest that this will play a larger role in the company's corporate strategy going forward.”
Girling, who has been with TC Energy for more than 25 years and took the reins from Hal Kvisle as president and CEO in July 2010, and led a dramatic expansion of the company, including the construction of new natural gas pipelines into Mexico and landing multiple contracts to build natural gas pipelines to service liquefied natural gas export facilities, including the Coastal GasLink project, which is currently under construction.
Girling, 57, has also overseen the company's troubled decade-long quest to build the 830,000-barrels-perday Keystone XL pipeline project from Alberta to the U.S. Gulf Coast, which became a political football in the U.S. and was vetoed by former U.S. president Barack Obama before President Donald Trump help resuscitate the project with an executive order.
The pipeline project is currently under construction in Canada and the U.S. though it faces multiple challenges on the American side of the border, as construction along waterways has been delayed and Democratic presidential candidate Joe Biden has threatened to rescind a presidential permit for the line if he's elected in November.
“Girling's efforts since being named CEO in 2010 have led to TRP's share price increasing by 70 per cent and the company's EV (enterprise value) more than doubling,” BMO Capital Markets analyst Ben Pham said in a research note.
Poirier will now oversee the completion of the troubled KXL pipeline — if it is finished on schedule in 2023 at a cost of US$14.4 billion.
“It has been a privilege and honour to lead TC Energy over the past 10 years and to be part of the extraordinary TC team,” Girling said in a release Monday. The company declined to make either the departing or the incoming CEO available for an interview.
The release trumpeted the choice of Poirier, who joined the pipeline giant as president of the Energy East project in 2014, as TC Energy's next leader. It also credited Poirier with the “origination, structuring and negotiation” of the company's US$13-billion acquisition of Columbia Pipeline group, which was seen as transformative for the company and cemented TC Energy's position as a North American midstream operator.
In 2013, the Ottawa-born Poirier left his Bay Street life as a banker to lead the development of Energy East for TC Energy, which was eventually scrapped amid widespread opposition.
While TransCanada was looking for “some outside thinking” to take on that project, it did not wander too far: Poirier already had a working relationship with TransCanada going back as far as 1999 as a JPMorgan adviser, helping raise debt and equity for the Calgary-based company.
“We grew up together — them (TransCanada's executive team) in corporate development and me in financial services. So I have a 20-year relationship with individuals inside the company,” Poirier told Financial Post in 2014 when he joined the company. “I was as familiar as an outsider can be with the company's values.”
Gillies said TC Energy has been pursuing two pumped storage hydroelectricity projects, one in Alberta and one in Ontario, as parts of its growth strategy.
“He's a logical successor from that perspective. It's a meaningful focus for the firm and for him in his role,” Gillies said, cautioning that a change of direction would likely occur over the longer term as it prioritizes growth projects.
“If you look at where renewable power producers are trading right now, compared with infrastructure, it's quite a premium,” he said, noting that companies like Innergex Renewable Energy Inc., Algonquin Power and Utilities Corp. and Northland Power all trade at higher earnings multiples than TC Energy, which is one of North America's largest pipeline companies.
In a release, Poirier said the company's current foundation “positions it very well for the future ... I am looking forward to transitioning into this new role and am grateful to Russ for his leadership, discipline and vision.”