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TC Energy (TRP) Expects Greater 2023 Costs for Coastal Project

Calgary, Alberta-based oil and gas pipeline company TC Energy Corporation TRP declared that it anticipates its comparable EBITDA to rise 5-7% in 2023. The company also forecasts costs related to its long-delayed Coastal GasLink pipeline project to increase substantially.

The 670-km Coastal GasLink pipeline, which was first announced in 2018, is being constructed for transporting natural gas to the LNG Canada facility on the west coast of British Columbia, Canada's first LNG export terminal.

The project, however, is facing significant cost pressures in Western Canada related to labor costs and shortages of skilled labor, together with contractor underperformance and disputes. The project has been delayed on multiple occasions due to COVID disruptions along with scrutiny from environmentalists and indigenous groups.

TRP stated that the project is now 80% complete. It is aiming for the project’s mechanical completion by year-end 2023. The firm also raised its 2022 capital expenditure forecast to about C$9.5 billion ($7.07 billion) in November, considering higher costs related to the project.

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TC Energy’s chief executive Francois Poirier stated that the cost hindrances faced by the pipeline project will have no impact on the sustainability of TRP’s dividend growth rate of 3-5% or the firm’s ability to accelerate deleveraging targets from 2026. Poirier added, “We continue to see long-term value in the Coastal GasLink Project for the WCSB, our customers, and the communities across the project route.”

TC Energy Corporation is a premier energy infrastructure provider in North America. Established in 1951, the company primarily focuses on natural gas transmission through its 57,500-mile network of pipelines located in Canada, the United States, and Mexico. TC Energy is also involved in other businesses, including power generation, natural gas storage and crude oil pipelines.

TC Energy currently has a Zacks Rank #3 (Hold). Investors interested in the energy space might look at some better-ranked stocks — DCP Midstream Partners DCP, Patterson-UTI PTEN and Par Pacific PARR — each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for DCP’s 2022 earnings stands at $4.47 per share, which indicates an increase of about 181.1% from the year-ago loss of $1.59.

DCP beat estimates for earnings in three of the trailing four quarters, the average being around 25.5%.

The consensus estimate for Patterson’s 2022 earnings is pegged at 54 cents per share, suggesting an increase of about 128% from the year-ago loss of $1.93.

PTEN beat estimates for earnings in three of the trailing four quarters, the average being around 169.2%.

The Zacks Consensus Estimate for Par Pacific’s 2022 earnings stands at $7.84 per share, which indicates an increase of about 555.8% from the year-ago loss of $1.72.

The consensus mark for PARR’s 2022 earnings has been revised upward twice in the past 60 days from $4.90 to $7.84 per share.

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