JOHANNESBURG (miningweekly.com) – As a result of higher interest expenses owing to debt issuances and lower capitalised interest, multilisted energy company TransCanada Corporation’s comparable earnings for the second quarter of 2016 were lower than the same period last year at $366-million, or $0.52 a share, compared with $397-million or $0.56 a share in the second quarter of 2015.

Net income attributable to common shares also decreased by $64-million to $365-million, or $0.52 a share, in the three months ended June 30, compared with the same period last year. 

The company also attributed its earnings loss to higher planned maintenance outage days at its Bruce Power facility, lower volumes on the Keystone and Marketlink pipelines, and lower earnings from Western Power.

Still, CEO Russ Girling noted that TransCanada’s portfolio of energy infrastructure assets continued to perform well during the second quarter of 2016.

He explained that net income was impacted on by one-time dividend equivalent payments on the subscription receipts related to the acquisition of Columbia Pipeline Group, which was acquired in July and was at $13-billion, while comparable earnings largely reflected planned maintenance activities at Bruce Power, including a station containment outage.

"Our $25-billion portfolio of near-term capital projects builds on a solid portfolio of stable and predictable pipeline and energy assets, that together supports and may augment an expected 8% to 10% yearly dividend growth rate through 2020," he said.

NATURAL GAS PIPELINES
In the period under review, the company placed facilities worth $450-million in service, while other facilities, worth $400-million, have been approved and are currently under construction. 

Further, new long-term delivery contracts on the natural gas transmission system (NGTL) to the Alberta/British Columbia border, known as the Sundre Crossover project, will require the construction of $135-million in facilities not previously included in TransCanada’s 2018 facilities programme. 

The total estimated projected capital for the NGTL system remains $7.3-billion, including the Sundre Crossover project, the North Montney pipeline, and the Merrick pipeline.

Meanwhile, in June, TransCanada announced that its joint venture (JV) with IEnova was chosen to build, own and operate the $2.1-billion Sur de Texas-Tuxpan pipeline, in Mexico.

Construction of the pipeline is being supported by a 25-year natural gas transportation service contract for 2.6-billion cubic feet a day with the Comisión Federal de Electricidad (CFE). TransCanada holds a 60% interest in the JV and will operate the asset.

The company was also awarded a contract in April to build, own and operate the Tula-Villa de Reyes pipeline in Mexico. 

Construction of the pipeline is being supported by a 25-year natural gas transportation service contract for 886-million cubic feet a day with the CFE. TransCanada expects to invest $550-million in a 36-inch-diameter, 420-km pipeline with an expected in-service date of early 2018.

Meanwhile, in the period under review, Bruce Power issued bonds and borrowed under its bank credit facility as part of its financing program to fund its capital programme and make distributions to its partners.

Distributions received from Bruce Power in second quarter 2016 included $725-million from this financing programme.