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TransCanada Profit Rises as Bruce Nuclear Units Return

July 26 (Bloomberg) -- TransCanada Corp., the company proposing to build the Keystone XL oil pipeline, said second-quarter profit increased 34 percent as nuclear reactors in Ontario returned to service and power prices in Alberta rose.

Net income rose to C$365 million ($355 million), or 52 cents a share, from C$272 million, or 39 cents, a year earlier, the Calgary-based company said in a statement today. Excluding a tax adjustment and hedging loss, per-share profit missed by 1 cent the 52-cent average of 13 analysts’ estimates compiled by Bloomberg. Sales rose 8.8 percent to C$2.01 billion.

TransCanada is supplying more electricity from Bruce Power, the world’s largest operating nuclear plant, with all eight units at the Ontario site operating for the first time in two decades. The company got about 34 percent of revenue from its energy business last year and the rest from transporting natural gas and oil on its 57,000-kilometer (35,000-mile) pipeline network.

The results were “roughly in line with the consensus estimate,” Pierre Lacroix, an analyst at Desjardins Securities Inc. in Montreal, wrote in a note to clients today. “We expect that investors will continue to focus on the major upcoming regulatory decision related to Keystone XL, which could be a positive catalyst for the shares, if approved as expected.”

TransCanada’s target to start operating the Keystone XL pipeline from Alberta’s oil sands to Gulf Coast refineries in the second half of 2015 will be “difficult” to meet, Russ Girling, chief executive officer of the company, said in a July 18 interview. The timing of a U.S. decision for a necessary permit may delay the line’s construction, he said.

Keystone Leg

The company gave no revised schedule or cost estimate for the $5.3 billion project today.

The lower leg of the line from Cushing, Oklahoma, to the Gulf Coast, which TransCanada started building earlier because it didn’t require a presidential permit, is 85 percent complete and on track to start transporting crude at the end of this year, the company said. A lateral pipeline to Houston is forecast to be online in 2014.

Earnings before interest, taxes, depreciation and amortization from the company’s energy division, which includes power generation as well as gas storage, increased 94 percent to C$330 million from C$170 million.

TransCanada, which has nine buy and eight hold recommendations from analysts, climbed 2 cents to C$46.43 at the close in Toronto. The shares have declined 1.3 percent this year.

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

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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