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TransCanada shares drop after Keystone delays to cost; Q1 profit rises

TransCanada shares drop after Keystone delays to cost; Q1 profit rises


TransCanada Corp (TSE:TRP) (NYSE:TRP) saw its shares fall on Friday after the company said it now expects its Keystone XL pipeline to be in service in the second half of 2015, with the delay likely to lead to an increase in costs. 

As the company still awaits a U.S. presidential permit, the cost estimate of US$5.3 billion for the pipeline, which is designed to deliver mostly Canadian and some U.S. crude oil to refiners in Texas and Louisiana, will increase depending on the timing of the permit, TransCanada said, based on its pipeline construction experience. As at the end of the quarter, the company had invested $1.8 billion in the project. 

Canada's No.2 pipeline company reported net income attributable to common shares for the three months that ended March 31 of $446 million, or 63 cents per share, compared to $352 million, or 50 cents a share in the year ago period. 

Earnings adjusted to exclude most one-time items were $370 million or 52 cents a share, with earnings per share steady compared to last year. 

Revenue rose 16 per cent to C$2.25 billion.

"Our three business segments performed well during the first quarter," said president and CEO, Russ Girling, in a release Friday. 

"The restart of Bruce Power Units 1 and 2, the completion of the Bruce Power Unit 4 life extension outage in April, the return to service of Sundance A this fall and a higher Canadian Mainline return on equity are all expected to have a positive impact on earnings in 2013. 

"At the same time, we continue to progress our $25 billion portfolio of commercially secured projects and advance other value creating opportunities including the Energy East Pipeline Project which would transport crude oil from western receipt points to eastern Canadian markets."

Over the next three years, subject to required approvals, the company expects to complete $12 billion of projects that are currently in advanced stages of development, including the Gulf Coast project, Keystone XL, the Keystone Hardisty Terminal, and the initial phase of the Grand Rapids Pipeline, among others. 

The Gulf Coast project is a 36-inch pipeline from Cushing, Oklahoma to the U.S. Gulf Coast, which is expected to begin delivering crude oil to Port Arthur, Texas at the end of 2013. It will have an initial capacity of up to 700,000 barrels per day (bbl/d).

The company has also secured an additional $13 billion of long-life, contracted energy infrastructure projects that are expected to be placed into service in 2016 and beyond.

TransCanada also declared Friday a quarterly dividend of 46 cents per share for the quarter ending June 30, equivalent to $1.84 per share on an annualized basis. 

Shares of the company fell 1.7 per cent on Friday to trade at $48.92 as of late morning, from an open of $49.46, trimming year-to-date gains of almost 3.9 per cent.  


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