TransCanada Quarterly Profit Beats Estimates on Weather

TransCanada Corp. (TRP), the company behind the delayed Keystone XL pipeline, reported first-quarter profit that beat analysts’ estimates after a cold winter boosted demand for fuel shipments.

Excluding one-time items, per-share profit of 60 cents exceeded the 59-cent average of 11 analysts’ estimates compiled by Bloomberg. Net income fell to C$412 million ($375 million), or 58 cents a share, from C$446 million, or 63 cents, a year earlier, the Calgary-based company said in a statement today.

TransCanada’s $5.4 billion Keystone XL was further stalled last month when the U.S. State Department extended its review due to legal uncertainty about the pipeline’s route in Nebraska, the latest delay for a project proposed in 2008 to supply U.S. Gulf Coast refineries with crude from Canada’s oil sands. The Nebraska Supreme Court will weigh an appeal of a state court’s ruling that made the line’s path illegal.

“The share price weakness from the Keystone XL delay seems overdone,” Robert Kwan and Nelson Ng, analysts at RBC Capital Markets in Vancouver, wrote in an April 24 note, pointing out that TransCanada stood to gain in the quarter from higher prices for power capacity and spot supplies in New England and New York.

Spot power prices in New York were on average 77 percent higher in the first quarter from a year earlier, according to data compiled by Bloomberg.

Nuclear Restarts

TransCanada is selling more power after the restart of nuclear units at Bruce Power in Ontario and coal units at Sundance A in Alberta. The company also started supplying oil during the quarter to the $2.3 billion southern leg of Keystone XL, which didn’t require a presidential permit to build because it doesn’t cross an international border with the U.S.

The Obama administration on April 18 delayed its decision on Keystone XL’s northern segment, allowing more time for comments from the eight federal agencies that previously had until early May to weigh in on whether the line is in the U.S. national interest.

President Barack Obama rejected an earlier proposal for Keystone XL in 2012, citing environmental concerns with its route in Nebraska. TransCanada split the project, re-applied and won support from the Nebraska governor and legislature for a new path that avoided an aquifer. The state court’s February ruling invalidated legislation that let the Republican governor approve the path.

TransCanada reported the results before the start of regular trading. The stock, which has 10 buy and seven hold recommendations from analysts, rose 0.2 percent to C$51.18 yesterday on the Toronto Stock Exchange.

To contact the reporter on this story: Rebecca Penty in Calgary at rpenty@bloomberg.net

To contact the editors responsible for this story: Susan Warren at susanwarren@bloomberg.net Stephen Cunningham, Jasmina Kelemen

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