February 23, 2010 / 2:45 PM / 8 years ago

UPDATE 3-TransCanada profit misses forecast, Keystone delayed

* Keystone start-up pushed back

* Raises quarterly dividend by 5.3 pct

* Shares up 0.9 percent on TSX (Add details, comments. In U.S. dollars unless noted)

By Scott Haggett

CALGARY, Alberta, Feb 23 (Reuters) - TransCanada Corp (TRP.TO) posted a fourth-quarter profit that was up 38 percent but missed market expectations as it spent more to advance its Alaska pipeline project and power prices dropped.

TransCanada, the country’s biggest pipeline and power company, also raised its quarterly dividend by 5.3 percent to 40 Canadian cents from 38 Canadian cents, starting from the current quarter.

TransCanada, is best known for its network of natural gas pipelines in Canada and the United States and for its power-generation operations, which include a stake in the Bruce nuclear plant in Ontario and New York City’s Ravenswood generating station.

The company is also poised to open the Keystone oil pipeline to carry 435,000 barrels of oil sands crude to the U.S. Midwest. It said in its earnings release that the line will not deliver oil until the middle of the year, later than initially expected.

“In our view this represents a one-quarter delay from previous estimates,” Chad Friess, an analyst at UBS Securities, said in a note to clients.

TransCanada said Keystone was not moving into the start-up phase as quickly as hoped and that it has not yet begun filling the line with oil - which had been expected to begin late last year.

Russ Girling, president of the company’s pipeline unit, said TransCanada has stockpiled a million barrels of oil in tanks, with another 8 million barrels needed, and expects to begin filling the line “over the next week or two”.

“We should have the line full within a hundred days or so and then we’ll be able to start ramping up throughput through to the end of the year,” Girling said on a conference call. “So we’re probably delayed by a few weeks here.”

The company posted fourth-quarter net income applicable to common shareholders of C$381 million, or 56 Canadian cents a share, up from C$277 million, or 46 Canadian cents a share, in the fourth quarter of 2008.

Comparable earnings, which exclude most one-time items, were C$328 million, or 48 Canadian cents a share, up 21 percent from C$271 million, or 46 Canadian cents. Analysts on average had expected earnings of 51 Canadian cents a share, according to Thomson Reuters I/B/E/S.

The company said its profit rose on higher earnings from its gas storage business and improved prices for Bruce’s electricity, offsetting increased spending to push its Alaska pipeline project forward and lower power prices in Western Canada and the United States.

It also had 14 percent more shares out in the quarter, compared with the year-before period, after issuing stock to pay for its slate of new projects.

Fourth-quarter revenue fell 5 percent to C$2.21 billion.

Earlier this year, TransCanada filed an open season plan with the U.S. Federal Energy Regulatory Commission for its Alaska pipeline project in partnership with Exxon Mobil Corp (XOM.N). The open season is a period when would-be customers can commit to shipping gas on the line, which is estimated to cost between $32 billion and $41 billion to build.

TransCanada shares rose 28 Canadian cents, or 0.8 percent, to C$34.93 on the Toronto Stock Exchange on Tuesday.

$1=$1.06 Canadian Additional reporting by Arnika Thaku; editing by Peter Galloway

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