TransCanada Quarterly Profit Beats Estimates on Weather

TransCanada Corp., 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 a foreign exchange hedging loss and interest expense, 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 shares may gain should company executives discuss the growth potential of various business units on a conference call today, “particularly against the backdrop of negative sentiment on the Keystone XL delay that we believe unduly impacted the share price,” Robert Kwan, an analyst at RBC Capital Markets in Vancouver, wrote in a note.

The company said it benefited from higher capacity and power prices in the U.S. 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.

Sales rose 28 percent to C$2.88 billion from C$2.25 billion in the same period last year.

Strong Demand

“An unseasonably cold winter resulted in strong demand for our critical pipeline and power infrastructure assets,” Chief Executive Officer Russ Girling said in today’s statement.

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, was little changed at C$51.17 at the close in Toronto. TransCanada is up 5.4 percent this year.

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