The proposed Kinder Morgan Inc. acquisition of El Paso Corp. doesn’t change Calgary, Alberta-based TransCanada Corp.’s strategy that is divided among natural gas, including shale; oil through its proposed addition to Keystone XL pipeline; and a growing gas-fired and renewable-based power generation business, CEO Russ Girling told financial analysts Tuesday as TransCanada reported a robust quarter-over-quarter improvement in profits for the third quarter.
In a call dominated with discussion of the huge and controversial Keystone XL oil pipeline that is pending a U.S. State Department determination on the project’s importance to U.S. national security interests (see related story), TransCanada reported an 11% increase in 3Q profits C$417 million in comparable earnings, or C59 cents/share, a 9% quarter-over-quarter increase.
Noting that Kinder-El Paso is one of several energy mergers and acquisitions of late, Girling said the proposed marriage appears to be positively received by the shareholders of both companies, so “that is positive in terms of building a company with a larger standing, a larger capacity.” He said TransCanada remains focused on its large, C$20 billion capital building program, of which it is halfway through.
“We’ve got another C$10 billion in projects that we are now constructing,” said Girling, noting that it is spurred by what he called “three strong core businesses” — natural gas, oil and electric generation– “that all have good fundamentals for growth.”
Shale gas is resulting in large capital opportunities for TransCanada, Girling said. And he sees “billions of dollars” in more capital investment on the oil side.
“So as I look forward, I see our capital opportunities as substantial, and at the current time, we are not looking for acquisition opportunities as an avenue for the reinvestment of our free cash flow,” Girling said. “Our focus isn’t on participating in any large corporate type of merger or acquisition at this time. We have to continue staying focused on what’s in front of us, and I think that has the potential to add great shareholder value.”
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