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    TRP   CA87807B1076

TC ENERGY CORPORATION

(TRP)
  Report
Delayed Toronto Stock Exchange  -  12:52:15 2023-02-02 pm EST
55.06 CAD   +1.76%
12:12pTC Energy Kept at Neutral at Credit Suisse as Coastal GasLink Costs Rise; Price Target Cut to C$60.50
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12:00pS&P Revises Outlook on TC Energy to Negative
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11:22aTC Energy Kept at Outperform at BMO as Coastal GasLink Costs Rise; Price Target Cut to C$64.00
MT
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TC Energy expects cost of Coastal GasLink pipeline project to rise

11/29/2022 | 03:44pm EST

CALGARYTC Energy Corp. is expecting what it calls a "material increase" in the cost of its Coastal GasLink pipeline project.

The Calgary-based pipeline company said in an investor presentation Tuesday that it is facing significant cost pressures in Western Canada related to labour costs and shortages of skilled labour, along with contractor underperformance and disputes.

The project has also been hurt by other unexpected events including drought conditions, and erosion and sediment control challenges, the company said.

TC Energy did not put a dollar value on the cost overruns, though it said it expects to provide an updated capital cost estimate early next year that will incorporate the recent developments.

It is the second time in a handful of months that TC Energy has flagged the rising costs of Coastal GasLink. In July, the company said it expected the cost of the project spanning northern British Columbia had risen to $11.2 billion compared with an earlier estimate of $6.6 billion.

The 670-kilometre pipeline, which aims to carry natural gas across the province to the LNG Canada processing and export facility in Kitimat, B.C., is 80 per cent complete.

TC Energy CEO François Poirier said the company is pursuing potential recoveries from contractors to offset a portion of the rising costs, though those efforts might not be concluded until after the project is completed.

The company still expects Coastal GasLink to be completed by the end of 2023, and Poirier said its escalating price tag won't keep TC Energy from achieving its debt reduction target.

“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 three to five per cent or our ability to accelerate our deleveraging target from 2026,” said Poirier in a news release.

The Coastal GasLink pipeline is not the only major energy infrastructure project in Canada to be plagued by cost overruns this year. In February, the company behind the ongoing Trans Mountain pipeline expansion project — which will increase oil transportation capacity from Alberta to the West Coast — announced the new cost of the project is an estimated $21.4 billion, up from an earlier estimate of $12.6 billion.

Trans Mountain Corp. blamed the surging cost projections for the project on the COVID-19 pandemic and the effects of the November 2021 flooding in B.C., as well as project enhancements, increased security costs, route changes to avoid culturally and environmentally sensitive areas, and scheduling pressures related to permitting processes and construction challenges in difficult terrain.

Budget overruns at both pipelines have provided fodder for environmental groups, who believe companies should be investing in green energy instead of traditional fossil fuels.

"The multi-billion-dollar cost overrun on this pipeline could have financed the largest investment in community-based renewables in Canadian history," said Keith Stewart, senior energy strategist with Greenpeace Canada.

This report by The Canadian Press was first published Nov. 29, 2022.

Companies in this story: (TSX:TRP)

© 2022 The Canadian Press. All rights reserved., source Canadian Press DataFile

All news about TC ENERGY CORPORATION
12:12pTC Energy Kept at Neutral at Credit Suisse as Coastal GasLink Costs Rise; Price Target ..
MT
12:00pS&P Revises Outlook on TC Energy to Negative
MT
11:22aTC Energy Kept at Outperform at BMO as Coastal GasLink Costs Rise; Price Target Cut to ..
MT
09:13aRBC Capital Markets Cuts TC Energy's Price Target After Increase in CGL Cost Estimate
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08:46aCredit Suisse Lowers TC Energy's PT to CA$60.50 From CA$63 After Incorporating Recent U..
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08:21aRBC Cuts Price Target on TC Energy to CA$65 From CA$73, Maintains Outperform Rating
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Analyst Recommendations on TC ENERGY CORPORATION
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Financials
Sales 2022 14 817 M 11 123 M 11 123 M
Net income 2022 3 525 M 2 646 M 2 646 M
Net Debt 2022 58 245 M 43 724 M 43 724 M
P/E ratio 2022 13,1x
Yield 2022 6,65%
Capitalization 54 759 M 41 135 M 41 108 M
EV / Sales 2022 7,63x
EV / Sales 2023 7,41x
Nbr of Employees 7 017
Free-Float 96,7%
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Mean consensus HOLD
Number of Analysts 22
Last Close Price 54,11 CAD
Average target price 61,90 CAD
Spread / Average Target 14,4%
EPS Revisions
Managers and Directors
Francois L. Poirier President, Chief Executive Officer & Director
Joel E. Hunter Executive VP, Chief Financial & Risk Officer
Siim Alden Vanaselja Chairman
Leslie C. Kass Executive Vice President-Technical Centre
Mary Pat Salomone Independent Director
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