TransCanada Corp., the company suing the U.S. government for denying its Keystone XL pipeline, reported its first-ever loss in the fourth quarter of 2015 as it wrote off investments in the project and contended with lower power prices in Alberta.
The loss was $2.5-billion or $3.47 a share, compared with net income of $458-million or 65 cents a year earlier, the Calgary-based company said in a statement on Thursday. Excluding one-time items such as a $2.9-billion writedown tied to Keystone, the results were better than the the 61-cent average of 12 analysts' estimates compiled by Bloomberg.
TransCanada is increasing its quarterly dividend 9 per cent to 56.5 cents a share, according to the statement. The company is relying on small– and medium-sized projects to grow its dividend payments by eight to 10 per cent a year through 2020 as larger developments are delayed. Big oil lines including Keystone XL and Energy East in Canada have struggled to win political support. Two natural gas pipes to Canada's Pacific Coast depend on investors building the liquefied natural gas export terminals they would serve.
"Although 2015 was a very challenging year for the energy industry, our $64-billion portfolio of high-quality energy infrastructure assets performed well," Russ Girling, TransCanada's chief executive officer, said in the statement. "Excluding specific items, comparable earnings and funds generated from operations reached record levels while we continued to safely and reliably meet the needs of our customers across North America."
Low Alberta power prices due to new supplies and an economic downturn limited revenues in the power division.
"We expect additional tuck-in style catalysts through 2016, including additional 25-year, take-or-pay contracted Mexico gas pipeline projects," and potentially one LNG gas pipeline project being given the go-ahead by its investors, Patrick Kenny, an analyst at National Bank Financial in Calgary, wrote in a Jan. 24 research note.
TransCanada last month opened one of the largest trade appeals ever brought against the U.S., seeking to recoup $15-billion of costs and damages tied to the Obama administration's rejection of the Keystone XL oil pipeline. The company also sued the U.S. government over the denial of the $8-billion cross– border project. At the time, TransCanada estimated it would record $2.5-billion to $2.9-billion in writedowns tied to the proposal in fourth-quarter results.
Keystone XL, which would link Canadian crude supplies with U.S. Gulf Coast refineries, is among about $27-billion of large– scale oil and gas pipelines TransCanada is seeking to build over the long term. The company derived about 63 per cent of its revenues in 2014 from pipelines, and the rest from power.
Spot Alberta power prices fell about 30 per cent to average $21.19 per megawatt hour in the fourth quarter, from $30.44 a year earlier.
"We continue to see a market in Alberta that's well– supplied, in fact a bit oversupplied, at least in the near term," Bill Taylor, TransCanada's executive vice-president and president of energy, said on an investor call last November.
TransCanada reported its results before the start of regular trading on North American markets. The stock, which has 10 buy and five hold recommendations from analysts, rose 1 per cent to $48.23 on Wednesday in Toronto. The shares are up 6.7 per cent this year.