After two years in the doldrums, pipeline stocks are starting to move higher

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Unless there is a recession, rates aren’t expected to fall as quickly as they rose and are unlikely to settle anywhere near the lows we saw back in 2020-21

Sections of the Enbridge Line 3 pipeline are seen on the construction site on the White Earth Nation Reservation near Wauburn, Minnesota, on June 5, 2021.Because these are capital-intensive companies, they are highly interest-rate-sensitive. All were hit hard by the rapid rise in rates in 2022-23 as central banks fought to tame high inflation. But now it’s a new ball game. The Bank of Canada has already cut twice, and the U.S.

Earnings attributable to shareholders came in at $1.8-billion, the same as in 2023. But on a per-share basis, they dropped a nickel to 86 cents because of the issuing of new common shares. Adjusted earnings decreased by $132-million, or 10 cents a share, compared with the same period in 2023. This was primarily the result of higher financing costs because of rising interest rates and long-term debt principal.

TRP also announced approximately $2.6-billion of divestitures as part of its $3-billion asset divestiture program. It included Canada’s largest Indigenous equity ownership agreement that will see Indigenous communities acquire a 5.34-per-cent minority interest in Nova Gas Transmission Ltd. and Foothills natural gas pipeline systems for gross proceeds of $1-billion.The company reaffirmed its projections for the year. Comparable EBITDA is expected to be $11.2-billion to $11.5-billion.

 

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