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Trans Mountain Corporation releases 2018 financial results

Published by , Editorial Assistant
World Pipelines,

Trans Mountain Corporation (TMC) has posted to its website the company’s financial statements for the year ending 31 December 2018 and the associated management report. The financial results of TMC were also included in Canada Development Investment Corporation’s annual report as part of its consolidated financial statements for 2018, released on 3 May 2019.

“I am extremely pleased by the company’s performance in 2018. Our financial results, the execution of the transition from Kinder Morgan and the work that has been undertaken as part of NEB Reconsideration hearing, demonstrates the tremendous strength and commitment of our employees to ensuring the ongoing safe operations,” said Ian Anderson, President and CEO of Trans Mountain Corporation.

On 28 May, 2018, Trans Mountain Corporation was formed as a result of the planned purchase from Kinder Morgan, for cash consideration of CAN$4.4 billion. As part of this agreement Trans Mountain and Kinder Morgan entered into a Transition Services Agreement, under which both parties agreed to support each other’s operations for up to a 12-month period ending August 2019. The purchase transaction closed on 31 August 2018, at which point Trans Mountain operations commenced under TMC.

Anderson added, “We are well along in our separation from Kinder Morgan, with systems and functions being established for the required strong, stand-alone business that we are. Our employees are embracing the new name, the new ownership and the exciting path ahead. I couldn’t be prouder of the resilience and focus of our people as we embark on yet another chapter of our journey together.”

12 October 2018 saw the release of a hearing order by the National Energy Board (NEB) for additional information by TMC and other Federal Authorities pertaining to its reconsideration of project-related marine shipping aspects of the Trans Mountain Expansion Project (TMEP). Trans Mountain Corporation filed all necessary materials with the NEB. After hearing completion, on 22 February 2019, the NEB released its report stating that in their considered view TMEP is in the Canadian public interest and therefore should be approved. The final report also provided details of the 156 conditions previously imposed on the Project and added 16 additional recommendations to the Governor In Council (GIC) for consideration.

Following the recommendation by the NEB on the approval of TMEP, a consultation process with Indigenous communities impacted by the project remains underway with a ‘whole of government’ approach to meaningful consultation and engagement. This approach will see all relevant government bodies participating in the renewed consultation process that includes 117 Indigenous communities in British Columbia and Alberta. It is intended to ensure that appropriate consultation and accommodation for Project specific impacts are addressed.

In November 2018, TMC welcomed its new Board of Directors, chaired by William (Bill) Downe, former CEO of BMO Financial Group. This distinguished TMC Board has extensive experience and an equally strong commitment to Trans Mountain’s focus on environmental protection, economic growth and the consideration of the interests of Indigenous communities in our plans and operations. The Board has constituted all appropriate governance committees and structures and is fully engaged with management on all important business matters.

“We have assembled a Board that is focused on the successful and safe operation of Trans Mountain, and we are committed to preserving the economic value of the business for the benefit of Canadians. The potential expansion of the pipeline system can be a key economic contributor to our nation, including the very important interests of Indigenous Communities,” said Mr. Downe.

Trans Mountain continues the planning and engineering necessary to begin construction of TMEP if and when the Project receives approvals and the NEB issues a Certificate of Public Convenience and Necessity (CPCN).

Thirteen shippers in total have signed contracts for service on the TMEP and have made 15- and 20-year commitments that total roughly 80% of the expected capacity in the expanded Trans Mountain pipeline.

2018 results and 2019 financial outlook

The financial results of Trans Mountain Corporation (TMC) reflect 4 months of operations (31 August 2018 to 31 December 2018) of Trans Mountain Pipeline (TMPL) and Puget pipeline. Total throughput on TMPL averaged approximately 280 000 bpd, and throughput to Washington State on the Puget line averaged approximately 139 000 bpd.

TMC revenues were CAN$137.8 million, including transportation revenue of CAN$116.4 million, lease revenue of CAN$20.4 million, and other revenue of CAN$1.0 million. Transportation revenue of CAN$116.4 million included CAN$107.1 million generated by TMPL and CAN$9.3 million generated by Puget. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation and equity allowance for funds used during construction) for the period of CAN$59.8 million included revenues of CAN$137.8 million, less pipeline operating costs of CAN$42.8 million, salaries and benefits costs of CAN$19.8 million, property and business taxes of CAN$10.3 million, and administration costs of CAN$5.1 million.

Capital spending during the period on maintenance, integrity, repairs and upgrades to existing facilities was CAN$17.9 million. Capital spending totalled CAN$202.6 million, with the majority of that (CAN$184.1 million) spent on TMEP safely standing down construction activities following the August 30 2018 FCA ruling, and continued work in areas not impacted by the FCA ruling such as planning and detailed engineering and design.

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