TransCanada Reports First Quarter Results, Bruce Power Refurbishment Nearing Completion
Results (1 MB, PDF)
CALGARY, Alberta – April 27, 2012 – TransCanada Corporation (TSX, NYSE: TRP) (TransCanada or the Company) today announced comparable earnings for first quarter 2012 of $363 million or $0.52 per share. Net income attributable to common shares for first quarter 2012 was $352 million or $0.50 per share. TransCanada’s Board of Directors also declared a quarterly dividend of $0.44 per common share for the quarter ending June 30, 2012, equivalent to $1.76 per common share on an annualized basis.
"TransCanada continued to produce solid earnings in a challenging environment," said Russ Girling, TransCanada's president and chief executive officer. "A very warm winter, historically low natural gas prices and planned maintenance outages at Bruce Power impacted earnings in the first quarter of 2012. The return to service of two refurbished nuclear reactors at Bruce Power and the contribution from other new assets position TransCanada well for the future. As gas and power prices recover, combined with the completion of our current $13 billion capital program, I fully expect TransCanada will continue to grow cash flow, earnings and dividends in the years ahead.”
Over the next three years, TransCanada expects to complete $13 billion of projects that are in the advanced stages of development - $7.8 billion in oil pipelines, $2.2 billion in natural gas pipelines and $3 billion in energy. They include: the re-start of two reactors at Ontario’s Bruce nuclear facility, the Keystone Gulf Coast Project and Keystone XL, the Keystone Bakken Marketlink Project, the Keystone Hardisty Terminal Project, additional extensions and expansions of the Alberta System, the Tamazunchale natural gas pipeline extension in Mexico, the final phase of the Cartier Wind power project in Québec and the acquisition of nine Ontario solar projects.
To date, the Company has spent approximately $6 billion on these low-risk energy infrastructure assets and is well positioned to fund the remainder of this capital program from internally generated cash flow and debt capacity. TransCanada expects these assets to generate significant, sustained earnings and cash flow growth and deliver superior returns to its shareholders.
(All financial figures are unaudited and in Canadian dollars unless noted otherwise)
Comparable earnings for first quarter 2012 were $363 million or $0.52 per share compared to $423 million or $0.61 per share for the same period in 2011. Incremental earnings from Keystone and other recently commissioned assets were more than offset by lower contributions from Bruce Power related to planned maintenance outages, reduced revenues from U.S. natural gas pipelines and natural gas storage, higher interest expense as a result of lower capitalized interest and reduced contributions from the Canadian Mainline and U.S. Power.
Net income attributable to common shares for first quarter 2012 was $352 million or $0.50 per share compared to $411 million or $0.59 per share in first quarter 2011.
Notable recent developments in Oil Pipelines, Natural Gas Pipelines, Energy and Corporate include:
U.S. crude oil production has been growing significantly in States such as Oklahoma, Texas, North Dakota and Montana. Producers do not have access to enough pipeline capacity to move this production to the large refining market at the U.S. Gulf Coast. The Gulf Coast Project will address this constraint.
The application will include the already reviewed route in Montana and South Dakota. The over three year environmental review for Keystone XL completed last summer was the most comprehensive process ever for a cross border pipeline. Based on that work, TransCanada expects its cross border permit should be processed expeditiously and a decision made once a new route in Nebraska is determined.
Earlier this month, legislation was passed in Nebraska and signed into law by the Governor that enabled TransCanada to re-engage with the State’s Department of Environmental Quality (DEQ), allowing the Company to continue to work collaboratively in determining an alternative route for Keystone XL that avoids the Sandhills. Alternative routing corridors and a preferred corridor were submitted to the DEQ April 18, 2012. The Department will now oversee the public comment and review process as TransCanada develops a specific alternate route.
The capital cost of Keystone XL is estimated to be US$5.3 billion, with US$1.5 billion having been invested as of March 31, 2012. The remainder will be spent between now and the in-service date of the expansion, which is expected by late 2014 or early 2015.
Natural Gas Pipelines:
In addition, infrastructure to connect WCSB supply to markets continues to be pursued, particularly to support further development of Alberta oil sands production and to supply proposed liquefied natural gas (LNG) export facilities on the West Coast.
During the first four months of 2012, TransCanada has substantially completed 10 separate pipeline projects for the Alberta System at a cost of approximately $600 million.
TransCanada anticipates investing approximately US$500 million in the pipeline and expects it will be operational in the first quarter of 2014. The 235-km (146-mile) long pipeline has a contracted capacity of 630 million cubic feet a day (mmcf/d). The pipeline will originate at the end of TransCanada's existing Tamazunchale Pipeline, eventually connecting with Mexico's existing pipeline grid and serve a CFE combined-cycle power generating facility.
The Tamazunchale Pipeline Extension demonstrates TransCanada’s continued commitment to developing Mexico's energy infrastructure to meet growing requirements for increased natural gas supply. The Mexican government recently announced a number of additional natural gas infrastructure projects for the country. This infrastructure will assist Mexico in meeting growing demand and support greenhouse gas reduction initiatives by enabling access to natural gas as a replacement fuel for heavy oil. TransCanada intends to continue to pursue future development opportunities in Mexico.
The reactor is presently producing steam and final safety checks are being conducted. The company anticipates the unit will start commercial operations in second quarter 2012. Refurbishment of the Unit 1 reactor at Bruce Power is also progressing and it is expected to begin commercial operations in mid-third quarter 2012.
TransCanada's share of the net capital cost of the refurbishment is expected to be approximately $2.4 billion. Once the work is complete, Bruce Power will be one of the world's largest nuclear facilities, generating more than 6,200 megawatts (MW) or about 25 per cent of Ontario's power.
Under the terms of the agreement, each of the nine solar projects will be developed and constructed by Canadian Solar Solutions Inc. utilizing their photovoltaic panels. TransCanada will purchase each project after they begin commercial operation and meet certain milestones. TransCanada anticipates the projects will be operational between late 2012 and mid-2013.
TransCanada has disputed both the force majeure and economic destruction claims. An arbitration process to resolve the matter began in early April and is expected to conclude in May, with a decision anticipated in mid-2012.
TransCanada has continued to record revenues and costs as it considers this event to be an interruption of supply. The Company believes the matter will be resolved in its favour.
Teleconference – Audio and Slide Presentation:
TransCanada will hold a teleconference and webcast to discuss its 2012 first quarter financial results. Russ Girling, TransCanada president and chief executive officer and Don Marchand, executive vice-president and chief financial officer, along with other members of the TransCanada executive leadership team, will discuss the financial results and Company developments before opening the call to questions from analysts and members of the media.
TransCanada 2012 first quarter financial results teleconference and webcast
Friday, April 27, 2012
1 p.m. mountain daylight time (MDT) / 3 p.m. eastern daylight time (EDT)
Analysts, members of the media and other interested parties are invited to participate by calling 866.226.1792 or 416.340.2216 (Toronto area). Please dial in 10 minutes prior to the start of the call. No pass code is required. A live webcast of the teleconference will be available at www.transcanada.com.
A replay of the teleconference will be available two hours after the conclusion of the call until midnight (EDT) May 4, 2012. Please call 905.694.9451 or 800.408.3053 (North America only) and enter pass code 8130635.
With more than 60 years experience, TransCanada is a leader in the responsible development and reliable operation of North American energy infrastructure including natural gas and oil pipelines, power generation and gas storage facilities. TransCanada operates a network of natural gas pipelines that extends more than 68,500 kilometres (42,500 miles), tapping into virtually all major gas supply basins in North America. TransCanada is one of the continent's largest providers of gas storage and related services with approximately 380 billion cubic feet of storage capacity. A growing independent power producer, TransCanada owns or has interests in over 10,800 megawatts of power generation in Canada and the United States. TransCanada is developing one of North America's largest oil delivery systems. TransCanada's common shares trade on the Toronto and New York stock exchanges under the symbol TRP. For more information visit: www.transcanada.com or check us out on Twitter @TransCanada.
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