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What Makes TransCanada Attractive in the Long Term

PART:
1 2 3 4 5
Part 2
What Makes TransCanada Attractive in the Long Term PART 2 OF 5

Your Guide to TransCanada’s 5 Operating Segments

TRP’s segments

TransCanada (TRP) operates through five segments—Canadian Natural Gas Pipelines, U.S. Natural Gas Pipelines, Mexico Natural Gas Pipelines, Liquids Pipelines, and Energy. The U.S. Natural Gas Pipelines segment contributed 41% to TransCanada’s 1Q17 earnings. Canadian Natural Gas Pipelines contributed 20% to TRP’s 1Q17 earnings.

Your Guide to TransCanada’s 5 Operating Segments

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The above graph shows the segmental contribution to TransCanada’s 1Q17 earnings.

Canadian Natural Gas Pipelines

TransCanada’s Canadian natural gas business is regulated by various governmental bodies. The NEB (National Energy Board) has complete jurisdiction over TRP’s Canadian gas business. The segment’s earnings increased 4% in 1Q17 over 1Q16.

U.S. Natural Gas Pipelines

TransCanada’s U.S. natural gas pipelines business is mainly regulated by FERC (Federal Energy Regulatory Commission). The U.S. Natural Gas Pipelines segment’s earnings rose by 294 million Canadian dollars for 1Q17 compared to 1Q16, mostly due to contributions from Columbia Pipeline Group, which the company acquired in 2016.

Your Guide to TransCanada’s 5 Operating Segments

The above graph compares TRP’s segmental performance in 1Q17 with 1Q16.

Mexico Natural Gas Pipelines

TRP’s Mexico Natural Gas Pipelines segment’s earnings rose by 73 million Canadian dollars for 1Q17 compared to the same period in 2016, mainly driven by contributions from two new natural gas pipelines—Topolobampo and Mazatlán.

Liquids Pipelines segment

TransCanada’s liquids pipeline infrastructure connects Alberta crude oil supplies to US refining markets in Illinois, Oklahoma, and Texas. It also connects US crude oil supplies from Cushing, Oklahoma, to refining markets in the US Gulf Coast. The segment’s earnings grew 7% year-over-year in 1Q17.

Energy segment

TransCanada’s Energy segment’s earnings rose by 324 million Canadian dollars for 1Q17 compared to 1Q16. TRP recorded a 240 million Canadian dollars pre-tax charge in 1Q16 due to the termination of Alberta PPAs (Power Purchase Arrangements).

Commenting on 1Q17 performance, Russ Girling, TransCanada’s president and CEO, said, “Comparable earnings per share increased 16 per cent compared to first quarter 2016 primarily due to strong performance across our Natural Gas Pipelines business, including Columbia which was acquired in mid-2016, while net cash provided by operations reached $1.3 billion.”

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