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2008 First Quarter Results
2008 Q1 version francaise
CALGARY, Alberta – April 25, 2008 – (TSX: TRP) (NYSE: TRP)
First Quarter Highlights
(All financial figures are unaudited and in Canadian dollars unless noted otherwise)
- Net income for first quarter 2008 of $449 million ($0.83 per share) compared to $265
million ($0.52 per share) in first quarter 2007, an increase of approximately 60 per cent on
a per share basis
- Comparable earnings for first quarter 2008 of $326 million ($0.60 per share), compared to
$250 million ($0.49 per share) for the same period in 2007, an increase of approximately 22
per cent on a per share basis
- Funds generated from operations for first quarter 2008 of $922 million compared to $582
million for the same period in 2007, an increase of approximately 58 per cent
- Dividend of $0.36 per common share declared by the Board of Directors
- Agreed to acquire the 2,480 megawatt (MW) Ravenswood Generating Facility in New York
City for US$2.8 billion
- Realized $152 million from Calpine bankruptcy settlements
- The Keystone Oil Pipeline project received U.S. Department of State Presidential Permit. Construction is expected to begin in second quarter 2008.
“Strong first quarter earnings and cash flow from our pipelines and energy businesses are the result of
TransCanada’s focus on quality investment opportunities in markets where we have expertise and
competitive advantage.” said Hal Kvisle, TransCanada president and chief executive officer. “As we
continue to pursue our goal of becoming the leading energy infrastructure company in North America,
we are excited by the significant growth opportunities available within our core businesses and our core
market regions. In the first quarter, we announced the Ravenswood acquisition in New York City and
continued to advance the Keystone Oil Pipeline project. It is opportunities such as these that will
continue to build long-term value for our shareholders.”
TransCanada Corporation (TransCanada) reported net income for first quarter 2008 of $449 million
($0.83 per share) compared to $265 million ($0.52 per share) for first quarter 2007.
Comparable earnings were $326 million ($0.60 per share) for first quarter 2008 compared to $250
million ($0.49 per share) in first quarter 2007. The $76 million ($0.11 per share) increase was due to
higher contributions from both the Pipelines and Energy businesses. The increase in Pipelines was
primarily due to a full quarter of earnings from the February 2007 acquisition of ANR and higher
earnings from both the Canadian Mainline and GTN. The increase in the Energy business was primarily
due to increased earnings from Eastern Power and Natural Gas Storage. Comparable earnings in first
quarter 2008 excluded $152 million realized on shares from the Calpine bankruptcy settlements, a loss
of $27 million to record the writedown of costs previously capitalized for the Broadwater LNG project,
$10 million related to a favourable lawsuit settlement, and a net unrealized loss of $12 million from fair
value adjustments in the natural gas storage business. Comparable earnings in first quarter 2007
excluded $15 million of favourable income tax adjustments.
Funds generated from operations in first quarter 2008 of $922 million was $340 million higher than the
$582 million generated in the same period in 2007. Net cash provided by operations in first quarter
2008 was $928 million compared to $618 million for the same period in 2007. These increases were
mainly due to the positive impact of the Calpine bankruptcy settlements and higher earnings noted
above.
Notable recent developments in Pipelines and Energy include:
Pipelines
- The Keystone Oil Pipeline project achieved a major milestone after receiving the U.S.
Department of State Presidential Permit authorizing the construction, maintenance and
operation of facilities at the U.S./Canada border to transport crude oil between the two
countries. Construction of the Keystone Oil Pipeline is scheduled to begin in second quarter
2008 with initial deliveries expected to commence to Wood River and Patoka, Illinois in fourth
quarter 2009.
- Gas Transmission Northwest Corporation (GTNC) and Portland have reached agreements with
Calpine for allowed unsecured claims of US$192.5 million and US$125 million, respectively, in
the Calpine bankruptcy. GTNC and Portland received initial distributions of Calpine shares in
February 2008 equal to approximately 85 per cent of the agreed upon claim. These shares were
sold and TransCanada realized $152 million after tax from this initial distribution. Timing and
amount of any additional distributions remain uncertain.
- TransCanada reached a settlement agreement with stakeholders on the Alberta System and filed
a 2008-2009 Revenue Requirement Settlement Application with the Alberta Utilities
Commission (AUC). The settlement includes all elements of the Alberta System revenue
requirement for the years 2008 and 2009.
- In an effort to connect U.S. Rockies natural gas supply to various markets in North America,
TransCanada announced the proposed Pathfinder and Sunstone natural gas transmission
pipelines. A segment of the proposed Pathfinder Pipeline project follows the same route as the
recently proposed Bison Pipeline project. TransCanada would be a partial owner in the
proposed Bison Pipeline project through its interest in TC PipeLines, LP.
- TransCanada submitted an application for license to construct the Alaska Pipeline project under
the Alaska Gasline Inducement Act (AGIA) at the end of 2007. That application is currently
under review by the Alaska Administration and, if recommended, will go to the Alaska
Legislature in second quarter 2008. If approved by the Legislature, TransCanada could be
granted the AGIA license later this year.
Energy
- TransCanada recently announced an agreement to acquire all the outstanding membership
interests of the 2,480 MW Ravenswood Generating Facility in New York City from National
Grid for US$2.8 billion plus closing adjustments. The acquisition is subject to various state and
federal government approvals, which are expected during the third quarter.
- Bruce Power has completed its comprehensive assessment of cost to complete the Bruce A Units
1 and 2 Restart Project. The capital program for the restart and refurbishment of Bruce A Units 1
and 2 is expected to be in the range of $3.1 to $3.4 billion, up from an original 2005 cost estimate
of $2.75 billion. TransCanada’s 50 per cent share is expected to be $1.55 to $1.70 billion,
compared to an original estimate of $1.38 billion. Project cost increases are subject to the capital
cost risk and reward sharing mechanism under the agreement with the Ontario Power Authority.
TransCanada expects the unlevered after tax return on its investment to be in the middle of the
previously announced range of 9.5 per cent to 13.5 per cent. In the event of a further 10 per cent
increase in capital costs, TransCanada’s unlevered after tax return on the project would be
approximately 10 per cent. With approximately 60 per cent of the project complete, it is
expected that the two units will return to service in late 2009 and early 2010.
- The U.S. Federal Energy Regulatory Commission authorized the construction and operation of
the Broadwater LNG project, subject to the conditions reflected in the authorization on March
24, 2008. On April 10, 2008 the New York State Department of State rejected the proposal to
construct this facility. Broadwater is assessing its options with respect to this project.
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For further information, please contact:
Media Inquiries:
Cecily Dobson / Shela Shapiro
(403) 920-7859
(800) 608-7859
Investor & Analyst Inquiries:
David Moneta / Myles Dougan / Terry Hook
(403) 920-7911
(800) 361-6522
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