Rising demand helps TC Energy beat expectations

Canadian pipeline operator TC Energy reported a slightly better-than-expected quarterly profit on Friday, helped by rising demand for its energy transport services as oil and gas prices surged after Russia's invasion of Ukraine.

The Calgary-based company said increasing U.S. liquefied natural gas (LNG) exports and a focus on global energy security were creating new opportunities. Around a quarter of U.S. LNG export volumes travel through TC's gas pipelines.

TC expects North American LNG exports to grow 90 per cent from this year's peak of 13.7 billion cubic feet per day (bcfd) to hit 25 bcfd by 2030.

“Going forward, we expect to compete for and win our fair share of the growth in the LNG market,” chief executive François Poirier told a conference call.

TC said its NGTL gas pipeline system in Canada had its highest average winter demand since 2000. U.S. natural gas pipeline flows rose five per cent from last year, and hit an all-time daily system delivery record of nearly 35 bcf in January.

TC's liquids pipelines business posted a profit of $272 million, compared with a year-ago loss of $2.51 billion related to the cancellation of its Keystone XL pipeline project.

Net income attributable to common shares stood at $358 million, or 36 cents per share, in the three months ended March 31, compared with a loss of $1.1 billion, or $1.1 per share, a year earlier.

On comparable basis, the company posted a profit of $1.12 per share, compared with estimates of $1.11 per share, according to Refinitiv IBES.

TC said 2022 capital spending will increase to $7 billion, up from a previous forecast of $6.5 billion, primarily due to higher costs on the NGTL system as a result of labour and materials cost inflation.

In its outlook, TC Energy says it expects capital expenditures this year to be about $7 billion, up from an earlier forecast for about $6.5 billion, primarily due to higher costs for the NGTL System.

“The global environment continues to be complex, representing an urgent need to develop greater energy security,” Poirier said in his message to shareholders. “Now more than ever, we understand the importance of North America's role in securing global energy supply.”