TC Energy Corporation hosted its annual Investor Day on 29 November. During the event the company provided an overview of their corporate strategy and highlighted their continued approach to delivering long-term shareholder value as they prudently manage their extensive opportunity set ahead. TC Energy are reaffirming their long-term comparable EBITDA growth outlook of 6% by 2026 and 3 - 5% annual dividend growth rate.
“We have an industry-leading CAN$34 billion of fully sanctioned, secured capital projects and an unparalleled opportunity-set that will continue to differentiate TC Energy as a leader in the energy infrastructure space,” said François Poirier, TC Energy’s President and CEO. “We are leveraging our extensive North American footprint to expand and extend the reach of our services that will also align with the evolving energy mix and needs of our customers.”
TC Energy are introducing their 2023 comparable EBITDA outlook that they expect will be 5 - 7% higher than 2022. Despite a challenging market backdrop, their business remains resilient and continues to produce strong results. Approximately 95% of their projected comparable EBITDA is under long-term take-or-pay contracts and/or rate regulation which provide insulation against rising inflation and interest rates. In addition, approximately 85% of their long-term debt is fixed-rate, with a weighted average maturity of approximately 20 years and a weighted average coupon of 4.8%.
TC Energy’s secured capital programme is expected to be primarily funded through a combination of increasing cash flows, incremental long-term debt and hybrid capacity, and other sources of capital. TC Energy expect that any funding requirements exceeding their targeted annual capital expenditure range of CAN$5 to CAN$7 billion will be funded through their flexible CAN$5+ billion divestiture programme that is expected to be executed during 2023. Any potential impact on their growth trajectory out to 2026 will be determined by the timing and proceeds of assets monetised, along with the contribution from projects yet to be sanctioned. However, the additional financial flexibility created through this process will enhance their strategic positioning to deliver shareholder value over the medium to long-term. TC Energy remain committed to concluding their discounted Dividend Reinvestment Program with the dividend declarations for the quarter-ending 30 June 2023.
Coastal GasLink Project update
With respect to the Coastal GasLink Project, TC Energy continue to face significant cost pressures in Western Canada relating to labour costs and shortages of skilled labour, along with contractor underperformance and disputes. The project has also been impacted by other unexpected events including drought conditions, and erosion and sediment control challenges. As a result, TC Energy now expect a material increase in project costs and TC Energy’s corresponding funding requirements. TC Energy are actively pursuing cost mitigants and potential recoveries from contractors to offset a portion of these costs, some of which may not be conclusively determined until after project completion. TC Energy expect to provide an updated capital cost estimate in early-2023 that will incorporate the scope of recent developments.
The project is now overall 80% complete and TC Energy continue to target mechanical completion by year-end 2023. TC Energy is committed to the highest level of safety for their workers, along with the communities and the environment in which TC Energy work. This above all is their primary commitment.
“Although Phase One of Coastal GasLink has been challenged by cost performance, we do not expect any impact on the sustainability of our dividend growth rate of 3 - 5% or our ability to accelerate our deleveraging target from 2026,” said Poirier. “We continue to see long-term value in the Coastal GasLink Project for the WCSB, our customers, and the communities across the project route.”
Read the article online at: https://www.worldpipelines.com/project-news/30112022/tc-energy-growth-outlook-and-coastal-gaslink-project-update/