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CALGARY, Alberta, July 28, 2022 — TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company) released its second quarter results today. TC Energy’s President and Chief Executive Officer, François Poirier commented, “Through the first six months of 2022, we have delivered strong results reflecting the high utilization we continue to see across our entire system. Demand for clean, responsibly sourced natural gas remains high in North America, with energy security also driving incremental growth in the global LNG market.” Poirier continued, “I am pleased to report we have reached a significant milestone with the Coastal GasLink Limited Partnership (Coastal GasLink LP), signing revised agreements with LNG Canada that will allow the safe and timely execution of our largest LNG-linked project. The 670-kilometre Coastal GasLink project is approximately 70 per cent complete, with mechanical in-service expected by the end of 2023. Together with LNG Canada, this project will provide the first direct path for Canadian natural gas to reach global LNG markets. By leveraging our competitive strengths, we continue to develop solutions to move, generate and store the energy North America relies on in a secure and increasingly sustainable way.”
(All financial figures are unaudited and in Canadian dollars unless otherwise noted)
|three months ended June 30||six months ended June 30|
|(millions of $, except per share amounts)||2022||2021||2022||2021|
|Net income/(loss) attributable to common shares||889||975||1,247||(82)|
|per common share – basic||$0.90||$1.00||$1.27||($0.08)|
|Canadian Natural Gas Pipelines||385||361||743||717|
|U.S. Natural Gas Pipelines||711||688||1,021||1,561|
|Mexico Natural Gas Pipelines||162||138||282||290|
|Power and Storage||170||158||246||321|
|Total segmented earnings||1,679||1,559||2,846||627|
|Canadian Natural Gas Pipelines||681||684||1,325||1,370|
|U.S. Natural Gas Pipelines||915||879||2,022||1,934|
|Mexico Natural Gas Pipelines||190||164||338||344|
|Power and Storage||252||157||409||335|
|Depreciation and amortization||(635)||(633)||(1,261)||(1,278)|
|Allowance for funds used during construction||63||64||138||114|
|Interest income and other included in comparable earnings||17||158||84||250|
|Income tax expense included in comparable earnings||(173)||(175)||(352)||(378)|
|Net income attributable to non-controlling interests||(9)||(6)||(20)||(75)|
|Preferred share dividends||(33)||(39)||(64)||(77)|
|Comparable earnings per common share||$1.00||$1.06||$2.12||$2.22|
|Net cash provided by operations||942||1,711||2,649||3,377|
|Comparable funds generated from operations||1,566||1,754||3,431||3,777|
|Per common share||$0.90||$0.87||$1.80||$1.74|
|Basic common shares outstanding(millions)|
|– weighted average for the period||983||979||982||966|
|– issued and outstanding at end of period||984||979||984||979|
1 Includes Capital expenditures and Contributions to equity investments.
Based on solid performance year-to-date, we reiterate that 2022 comparable EBITDA is expected to be modestly higher than 2021 and our 2022 comparable earnings per common share outlook is expected to be consistent with 2021. Please refer to the 2021 Annual Report for additional details. During the three months ended June 30, 2022, comparable earnings of $1.00 per common share and comparable funds generated from operations of $1.6 billion reflect the utility-like nature of our business together with contributions from projects that entered service in 2021 and 2022. By leveraging our competitive strengths, we continue to develop solutions to move, generate and store the energy North America relies on in a secure and increasingly sustainable way.
Results in the second quarter of 2022 are underpinned by high utilization rates across our asset base that continued to reliably meet North America’s growing demand for energy. The NGTL System had total system deliveries averaging 12.8 Bcf/d, up nine per cent compared to second quarter 2021. Our U.S. Natural Gas Pipelines flows averaged 25.4 Bcf/d, up over three per cent year-over-year, which included a new all-time daily power load peak delivery of 2.75 Bcf on ANR. During the first six months, we continue to advance approximately 3.3 Bcf/d of LNG-linked projects in our U.S. Natural Gas business. Combining our U.S. Natural Gas projects with Coastal GasLink, TC Energy remains well positioned to continue to expand it’s share of the North American LNG market. Bruce Power operational performance during the second quarter was exceptional with fewer outage days than planned. Project execution is on track, with Unit 6 MCR moving to the last part of the installation phase and remains on time and on budget. Additionally, during the quarter the Keystone Pipeline System safely delivered nearly 610,000 Bbl/d as we placed approximately 30 per cent of the 2019 Open Season contracts into service effective April 1, 2022 with additional volumes anticipated through year end.
We are also pleased to announce Coastal GasLink LP has achieved a significant milestone with the execution of revised project agreements with LNG Canada that incorporate a revised cost estimate for the project of $11.2 billion. The revised agreement allows us to continue the safe and timely execution of the 670-kilometre project which is now approximately 70 per cent complete, with two of eight sections finished and expected mechanical in-service by the end of 2023. The Wilde Lake compressor facility near Chetwynd at the eastern end of the route is also nearing completion, representing one of the most significant pieces of infrastructure on the project. Together with LNG Canada, the 2.1 Bcf/d project will provide the first direct path for western Canadian natural gas to reach global LNG markets, displacing coal-fired power and potentially reducing global GHG emissions by 60 to 90 million tonnes per year. Coastal GasLink LP is proud to be leading the way in terms of how energy projects are advanced in Canada, with over $1.4 billion in contracting opportunities awarded to Indigenous and local communities to date and with the recent 10 per cent equity option announcement with our Indigenous partners. In our view, global LNG fundamentals remain supportive of additional LNG exports from western Canada that we believe can be supported by the expansion of the Coastal GasLink project.
Our revised agreements with LNG Canada establish a better framework for project advancement and further strengthens our long-term partnership. The agreements resolve uncertainty over specific and anticipated costs, mitigate project funding and execution risks and allow us to continue the safe and timely execution of the project. We continue to believe the project remains economically viable and subject to a final investment decision, we anticipate a potential second phase of Coastal GasLink could enhance TC Energy’s project returns.
Our industry-leading secured capital program is now $28 billion and we expect to sanction approximately $5 billion of projects per year throughout the decade. Importantly, our secured capital projects are largely underpinned by long-term take-or-pay contracts and/or regulated business models, giving us visibility to deliver earnings and cash flow growth, while reducing our GHG emissions intensity and continuing to lower our overall leverage metrics. As we stated at our 2021 Investor Day, our secured capital program is expected to deliver a 2021-2026 comparable EBITDA compounded annual growth rate of five per cent that will support our dividend growth, funding of capital commitments and reduction of our overall leverage metrics.
Looking forward, we have an extraordinary opportunity to support energy security and move toward a low carbon future. Our critical energy infrastructure assets are connecting North America’s premier basins to LNG export facilities. We intend to continue expanding, extending and modernizing our existing natural gas pipeline network. Bruce Power’s zero-emission power delivery continues to grow through our $4.4 billion life extension program, with more investments anticipated through this decade. We are also enhancing our existing liquids infrastructure and adding operational flexibility for our customers. Additionally, we see opportunities to originate new energy solutions like the Alberta Carbon Grid, large-scale hydrogen production, pumped hydro storage and solar and wind PPAs. We remain confident in our business plan and expect to continue to grow our common share dividend at an annual rate of three to five per cent. This is consistent with our conservative approach to capital allocation, historic risk-adjusted return profile and is expected to provide the capacity to fund our sizeable capital program while enhancing our financial strength and flexibility.
Comparable EBITDA and comparable earnings
Consolidated capital spending and equity investments
NOTABLE RECENT DEVELOPMENTS INCLUDE:
Canadian Natural Gas Pipelines
On March 9, 2022, we announced the signing of option agreements to sell a 10 per cent equity interest in Coastal GasLink LP to Indigenous communities across the project corridor. The opportunity to become business partners through equity ownership was made available to all 20 Nations holding existing agreements with Coastal GasLink LP. The Nations have established two entities that together currently represent 16 Indigenous communities that have confirmed their support for the option agreements. The equity option is exercisable after commercial in-service of the pipeline, subject to customary regulatory approvals and consents, including the consent of LNG Canada.
The Coastal GasLink project is approximately 70 per cent complete. The entire route has been cleared, grading is more than 75 per cent complete and more than 320 km of pipeline has been installed, with reclamation activities underway in many areas.
U.S. Natural Gas Pipelines
Mexico Natural Gas Pipelines
Power and Storage
Other Energy Solutions
Teleconference and Webcast
We will hold a teleconference and webcast on Thursday, July 28, 2022 at 9 a.m. (MDT) / 11 a.m. (EDT) to discuss our second quarter 2022 financial results and company developments. Presenters will include François Poirier, President and Chief Executive Officer; Joel Hunter, Executive Vice-President and Chief Financial Officer; and other members of the executive leadership team.
Members of the investment community and other interested parties are invited to participate by calling 1.800.319.4610. No pass code is required. Please dial in 15 minutes prior to the start of the call. A live webcast of the teleconference will be available on TC Energy’s website at www.TCEnergy.com/events or via the following URL: http://www.gowebcasting.com/11982.
A replay of the teleconference will be available two hours after the conclusion of the call until midnight EDT on August 4, 2022. Please call 1.855.669.9658 and enter pass code 9146.
The unaudited interim Condensed consolidated financial statements and Management’s Discussion and Analysis (MD&A) are available on our website at www.TCEnergy.com and will be filed today under TC Energy’s profile on SEDAR at www.sedar.com and with the U.S. Securities and Exchange Commission on EDGAR at www.sec.gov.
About TC Energy
We’re a team of 7,000+ energy problem solvers working to move, generate and store the energy North America relies on. Today, we’re taking action to make that energy more sustainable and more secure. We’re innovating and modernizing to reduce emissions from our business. And, we’re delivering new energy solutions – from natural gas and renewables to carbon capture and hydrogen – to help other businesses and industries decarbonize too. Along the way, we invest in the communities where we live and work to strengthen community resilience and build a stronger future, together.
TC Energy’s common shares trade on the Toronto (TSX) and New York (NYSE) stock exchanges under the symbol TRP. To learn more, visit us at www.TCEnergy.com.
This release contains references to the following non-GAAP measures: comparable earnings, comparable earnings per common share, comparable EBITDA and comparable funds generated from operations. These non-GAAP measures do not have any standardized meaning as prescribed by GAAP and therefore may not be comparable to similar measures presented by other entities. These non-GAAP measures are calculated by adjusting certain GAAP measures for specific items we believe are significant but not reflective of our underlying operations in the period. These comparable measures are calculated on a consistent basis from period to period and are adjusted for specific items in each period, as applicable except as otherwise described in the Condensed consolidated financial statements and MD&A. Refer to: (i) each business segment for a reconciliation of comparable EBITDA to segmented earnings; (ii) Consolidated results section for reconciliations of comparable earnings and comparable earnings per common share to Net income attributable to common shares and Net income per common share, respectively; and (iii) Financial condition section for a reconciliation of comparable funds generated from operations to Net cash provided by operations. Refer to the Non-GAAP measures section of the MD&A in our most recent quarterly report for more information about the non-GAAP measures we use, which section of the MD&A is incorporated by reference herein. The MD&A can be found on SEDAR (www.sedar.com) under TC Energy’s profile.
This release should also be read in conjunction with our December 31, 2021 audited Consolidated financial statements and notes and the MD&A in our 2021 Annual Report. Capitalized abbreviated terms that are used but not otherwise defined herein are defined in our 2021 Annual Report. Certain comparative figures have been adjusted to reflect the current period’s presentation.
Jaimie Harding / Hejdi Carlsen
403.920.7859 or 800.608.7859
Investor & Analyst Inquiries:
Gavin Wylie / Hunter Mau
403.920.7911 or 800.361.6522
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