TransCanada Corp., the company proposing the $8-billion (U.S.) Keystone XL oil pipeline, said adjusted first-quarter earnings rose as higher crude shipments helped to offset lower returns from its power plants in Alberta.
Excluding losses from power price hedging and foreign currency exchange, income climbed to $465-million (Canadian), or 66 cents a share, from $422-million, or 60 cents, a year earlier, the Calgary-based company said in a statement Friday. Per-share profit matched the average of 12 analysts' estimates compiled by Bloomberg.
"Strong performance from our Keystone system, Eastern Canadian power and U.S. power segments helped to offset depressed power prices" in Alberta, chief executive officer Russ Girling said in a statement.
TransCanada is moving more oil after starting shipments in January, 2014, on its Gulf Coast pipeline from Oklahoma to Texas, the southern portion of the original Keystone XL proposal. The company is relying on new pipelines, including Gulf Coast, to fulfill a pledge to double its dividend growth rate through 2017 as it contends with weak Alberta power prices. The company said it will maintain its 52-cent dividend. Net income fell to $387-million, or 55 cents, from $412-million, or 58 cents, a year earlier.
TransCanada, which owns 21 power plants, is among generators being paid less for electricity in Alberta after about 1,400 megawatts of capacity were connected to the province's grid in 2014, more than the two prior years combined, according to the Alberta Electric System Operator. Power prices fell about 61 per cent in the quarter compared with the prior year, data compiled by Bloomberg show.
"In the near term, 2015 financial performance should further be protected given the company's normal hedging practice of power prices," Carl Kirst, an analyst at BMO Capital Markets Corp. in Houston, wrote in an April 15 note.
TransCanada is awaiting a U.S. decision on Keystone XL, a pipeline first proposed in 2008 that would carry crude from Alberta's oil sands to refineries on the Gulf Coast. The company split the project in 2012 after an initial rejection by President Barack Obama and renamed the southern leg the Gulf Coast line. The revised Keystone XL pipeline would run from Hardisty, Alta., to Steele City, Neb.
TransCanada has also proposed the $12-billion Energy East pipeline from Alberta to Canada's Atlantic Coast and is considering building a marine terminal in Quebec to support the project. TransCanada scrapped plans in April for a port facility in Cacouna, Que., because of the risk to the habitat of endangered beluga whales.
The results were released before the start of regular trading in North America. TransCanada rose 0.45 per cent to $56.25 at close on Friday. The stock has dropped 1.9 per cent this year through yesterday.