Canadian Manufacturing

Keystone XL writedown pushes TransCanada to $2.5B fourth quarter loss

Despite charge, company hikes dividend for 16th straight year

Barack Obama's former national security adviser said rejecting TransCanada Corp.'s Keystone XL project would be a gift to Vladimir Putin. PHOTO TransCanada

U.S. president Barack Obama blocked the controversial pipeline late last year, prompting TransCanada to file a lawsuit under Chapter 11 of the North American Free Trade Agreement. PHOTO: TransCanada

CALGARY—TransCanada Corp. said Thursday it lost $2.5 billion in the fourth quarter—mostly because of its stalled Keystone XL pipeline proposal.

The Calgary-based company took a $2.9-billion non-cash charge related to Keystone XL which was blocked by U.S. President Barack Obama late last year.

The loss amounted to $3.47 per share for the quarter compared with a profit of $458 million or 65 cents per share a year earlier. Revenue grew to $2.85 billion from $2.62 billion.

The loss didn’t prevent TransCanada from announcing a dividend increase for the 16th year in a row. The quarterly payment to shareholders will increase to 56.5 cents per common share, from 52 cents.

“Although 2015 was a very challenging year for the energy industry, our $64 billion portfolio of high-quality energy infrastructure assets performed well,” said Russ Girling, TransCanada’s president and chief executive.

TransCanada’s “comparable earnings” without the writedowns fell to $453 million or 64 cents per share compared with $511 million or 72 cents per share a year ago—mainly because of lower contributions from its Canadian power and pipeline businesses.

TransCanada has launched a challenge to the U.S. government’s rejection of Keystone XL.

The company has said it intends to file a claim under Chapter 11 of the North American Free Trade Agreement in response to the decision, which it called arbitrary and unjustified.

It has also filed a lawsuit in the U.S. Federal Court in Texas asserting that the president’s decision to deny construction of Keystone XL exceeded his power under the U.S. Constitution.

In addition to operating one of North America’s largest networks of oil and gas pipelines, TransCanada is part owner of the Bruce Power nuclear electricity business in Ontario as well as other power generating operations.

Girling said many of TransCanada’s assets are underpinned by regulated businesses or long-term contracts that provide predictable cash flows and minimal risk.

“In addition, we are proceeding with $13 billion of near-term growth opportunities that are expected to be in-service by 2018.”

Among its projects are the Prince Rupert Gas Transmission line, the Coastal GasLink project, and the Merrick line—all in British Columbia.

It’s also working on the Energy East oil pipeline that would stretch from Alberta to as far east as Saint John, N.B.

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