TransCanada Restores Profitability
Having disposed of most of its far-flung assets and righted its financial ship in 2000, TransCanada PipeLines will be focused on growing its core gas transmission and power generation business through its home territory in Canada and the northern tier of the U.S. in 2001.
TransCanada's pipeline unit is exploring growth opportunities "at each end of the pipe," President Doug Baldwin told an analysts' teleconference. That includes being involved in discussions for long-term solutions to bringing gas from the far north, as well as more immediate opportunities for expansions in established Canadian supply and market areas. And on the power generation side "there is a growing slate of opportunities we are examining currently."
The company reported net income applicable to common shares from continuing operations before unusual items for 2000 was $605 million compared to $505 million in 1999. Earnings per share, on the same basis, were $1.28 for 2000, compared to $1.08 in 1999. Overall net income applicable to common shares was $711 million or $1.50 per share, compared to a loss of $80 million in 1999.
The Canadian pipeline company disposed of $3.45 billion in assets during the past year, booking $2.3 billion of sale proceeds by Dec. 31 and applying much of the proceeds to retiring long-term debt and repurchasing preferred shares. TransCanada repaid or retired approximately $2.5 billion of term debt and preferred share obligations during 2000.
TransCanada's increased ownership interest in its two largest power investments, Ocean State Power and TransCanada Power L.P., plus gains in power marketing and trading, led to net earnings for the power sector of $105 million, more than double the $40 million recorded in 1999. Additional gains from activities last year will be reported this year, company officials said. Effective Dec. 31 TransCanada has moved to mark-to-market accounting for its trading units.
The natural gas marketing sector did not fare as well last year, recording a $129 million loss, based mainly on after-tax net losses of $124 million paid to get out from under long term fixed-price contracts for gas. The company also recorded a $13 million loss due to the bankruptcy of a third party U.S. storage operator. The long term contracts had been signed "to support various corporate initiatives, including pipeline investments and downstream pipeline expansions. The profitability of these contracts was predicated on sustained historical price differentials between natural gas supply and market points. Over the past two years, the price differentials have narrowed," TransCanada said.
While net earnings from its two main pipelines, the Alberta System and the Canadian mainline, remained about even, the overall transmission total, including North American ventures - some of them discontinued - dropped from $671 million in 1999 to $612 million in 2000. The company noted that it had recently reached a tolling settlement for the Alberta system and was continuing negotiations for new mainline rates.
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