Southeast Gateway makes significant progress toward completion with estimated capital expenditures

11 per cent lower to US$3.9 to US$4.1 billion

Overall net capital expenditure outlook for 2024 revised eight per cent lower to $7.4 to $7.7 billion

reflecting project execution and optimization

CALGARY, Alberta, Nov. 07, 2024 (GLOBE NEWSWIRE) -- TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or the Company) released its third quarter results today. François Poirier, TC Energy's President and Chief Executive Officer commented, "Following strong asset performance driven by our focus on safety and operational excellence and reflecting the increase in segmented earnings during the first nine months of 2024, we now expect comparable EBITDA1 to be at the upper end of our 2024 outlook.” Poirier continued, "Our Southeast Gateway pipeline project in Mexico is making significant progress toward commercial in-service no later than mid-next year and we now expect capital expenditures associated with the project to be between US$3.9 to US$4.1 billion, approximately 11 per cent (mid-point) below the original cost estimate of US$4.5 billion. Reflecting strong project execution, we anticipate overall net 2024 capital expenditures to be approximately eight per cent (mid-point) lower, at $7.4 to $7.7 billion, further enhancing our financial strength and flexibility."

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Highlights

(All financial figures are unaudited and in Canadian dollars unless otherwise noted)

  • Third quarter 2024 financial results:
    • Comparable earnings1 of $1.1 billion or $1.03 per common share compared to $1.0 billion or $1.00 per common share in 2023 and net income attributable to common shares of $1.5 billion or $1.40 per common share compared to net loss attributable to common shares of $0.2 billion or net loss per common share of $0.19 in third quarter 2023
    • Comparable EBITDA of $2.8 billion compared to $2.6 billion in 2023 and segmented earnings of $2.6 billion compared to $0.6 billion in third quarter 2023
  • 2024 comparable EBITDA at upper end of outlook and capital expenditures lower:
    • Comparable EBITDA is expected to be at the upper end of our $11.2 to $11.5 billion2 range, which on a TC Energy post-spinoff basis (excluding Liquids Pipelines contribution in 2024) equates to a range of $9.9 to $10.1 billion
    • Comparable earnings per common share remains consistent with our 2023 Annual Report
    • Capital expenditures are anticipated to be $8.1 to $8.4 billion on a gross basis, or $7.4 to $7.7 billion on a net basis after considering non-controlling interests, versus previous outlook of $8.5 to $9.0 billion or $8.0 to $8.5 billion, respectively.
  • Completed the successful spinoff of the Liquids Pipelines business (the spinoff Transaction) on October 1, 2024
    • Reduced outstanding long-term debt by approximately $7.6 billion in October 2024 utilizing proceeds from South Bow Corporation debt issuance and other sources
  • Reduced Southeast Gateway pipeline project capital cost estimate to a range of US$3.9 to US$4.1 billion, down from the original estimate of US$4.5 billion with the project tracking towards commercial in-service no later than mid-2025
  • Received CER approval for the NGTL System five-year negotiated revenue requirement settlement which commences on January 1, 2025
  • Filed a Section 4 Rate Case with FERC on Columbia Gas requesting an increase to the maximum transportation rates, expected to become effective April 1, 2025, subject to refund
  • Completed approximately $1.6 billion of asset divestitures year-to-date including Portland Natural Gas Transmission System (PNGTS) for pre-tax proceeds of approximately $1.1 billion (US$0.8 billion), which includes the assumption by the purchaser of US$250 million of senior notes outstanding at PNGTS and the CFE's equity injection of US$340 million as well as non-cash consideration for a 13.01 per cent equity interest in TGNH
  • Declared a quarterly dividend of $0.8225 per common share for the quarter ending December 31, 2024 which reflects TC Energy's proportionate allocation following the spinoff Transaction.
 three months ended

September 30

 nine months ended

September 30

(millions of $, except per share amounts)2024  2023  2024  2023 
        
Income       
Net income (loss) attributable to common shares1,457  (197) 3,623  1,366 
per common share - basic$1.40  ($0.19) $3.49  $1.33 
        
Segmented earnings (losses)       
Canadian Natural Gas Pipelines495  (799) 1,510  (782)
U.S. Natural Gas Pipelines1,330  782  3,135  2,576 
Mexico Natural Gas Pipelines237  210  715  646 
Liquids Pipelines240  253  826  702 
Power and Energy Solutions354  234  826  741 
Corporate(37) (36) (121) (74)
Total segmented earnings (losses)2,619  644  6,891  3,809 
        
Comparable EBITDA       
Canadian Natural Gas Pipelines845  781  2,537  2,301 
U.S. Natural Gas Pipelines1,002  968  3,311  3,160 
Mexico Natural Gas Pipelines265  232  765  597 
Liquids Pipelines360  398  1,095  1,078 
Power and Energy Solutions326  256  873  754 
Corporate(7) (3) (6) (9)
Comparable EBITDA2,791  2,632  8,575  7,881 
Depreciation and amortization(713) (690) (2,149) (2,061)
Interest expense included in comparable earnings(836) (865) (2,516) (2,413)
Allowance for funds used during construction210  164  551  443 
Foreign exchange gains (losses), net included in comparable earnings(33) (25) (41) 78 
Interest income and other included in comparable earnings61  63  207  157 
Income tax (expense) recovery included in comparable earnings(235) (220) (758) (749)
Net (income) loss attributable to non-controlling interests included in comparable earnings(145) (1) (457) (18)
Preferred share dividends(26) (23) (76) (69)
Comparable earnings1,074  1,035  3,336  3,249 
Comparable earnings per common share$1.03  $1.00  $3.21  $3.16 
        
Cash flows       
Net cash provided by operations1,915  1,824  5,612  5,408 
Comparable funds generated from operationsi1,915  1,755  6,225  5,575 
Capital spendingii2,109  3,289  5,597  9,313 
Acquisitions, net of cash acquired-  -  -  (302)
        
Dividends declared       
per common share$0.96  $0.93  $2.88  $2.79 
        
Basic common shares outstanding (millions)       
- weighted average for the period1,038  1,035  1,038  1,028 
- issued and outstanding at end of period1,038  1,037  1,038  1,037 
i   Comparable funds generated from operations is a non-GAAP measure used throughout this release. This measure does not have any standardized meaning under GAAP and therefore is unlikely to be comparable in similar measures presented by other companies. The most directly comparable GAAP measure is Net cash provided by operations. For more information on non-GAAP measures, refer to the Non-GAAP Measures section of this release.   

ii  Capital spending reflects cash flows associated with our Capital expenditures, Capital projects in development and Contributions to equity investments. Refer to Note 4, Segmented information, of our Condensed consolidated financial statements for additional information.

CEO Message

Underpinned by wide-scale electrification, demand for natural gas and reliable power generation continues to reach record highs. Our forecast highlights North America's natural gas demand increasing by approximately 40 Bcf/d through 2035, largely driven by LNG and power generation demand growth in the critical markets our assets serve. We believe that the strength of our base business combined with the vast opportunity set and disciplined capital allocation will allow us to deliver solid growth, low-risk, repeatable performance, well into the future. Our continued focus on a clear set of priorities for 2024, including safety, operational excellence and project execution has delivered strong operational and financial results. For the first nine months of 2024, comparable EBITDA increased approximately nine per cent, and segmented earnings increased approximately 81 per cent compared to the first nine months of 2023.

We have made continued progress towards our 2024 priorities including significant milestones on the Southeast Gateway pipeline project, executing our plan towards achieving 4.75 times debt-to-EBITDA3 by year end and continuing to enhance the value of our assets through successfully completing the spinoff of our Liquids Pipelines business into a separate, publicly traded entity, South Bow Corporation. Reflecting strong year-to-date performance and an increase in segmented earnings, we now expect 2024 comparable EBITDA1 to be at the upper end of our $11.2 to $11.5 billion range which on a TC Energy post-spinoff basis (excluding Liquids Pipelines contribution in 2024) equates to a range of $9.9 to $10.1 billion. Further, we expect our 2024 net capital expenditures to be approximately $7.4 to $7.7 billion versus our previous outlook of $8.0 to $8.5 billion after considering capital expenditures attributable to non-controlling interests.  

Operational highlights include:

  • Canada Natural Gas Pipelines deliveries averaged 22.2 Bcf/d, up two per cent compared to third quarter 2023
    • Total NGTL System receipts averaged 13.9 Bcf/d, comparable to third quarter 2023
    • Canadian Natural Gas Pipelines set an all-time power delivery record of 1.4 Bcf on July 15, 2024
  • U.S. Natural Gas Pipelines daily average flows were 25.9 Bcf/d, up three per cent compared to third quarter 2023
    • U.S. Natural Gas Pipelines set quarterly average delivery records to power generators at 3.8 Bcf/d and continued high deliveries to LNG facilities of 3.2 Bcf/d
  • Mexico Natural Gas Pipelines flows averaged 3.2 Bcf/d
    • Began deliveries to LNG facilities this quarter
  • The Keystone Pipeline System achieved 95 per cent operational reliability in the third quarter 2024
  • Bruce Power achieved 98 per cent availability in third quarter 2024
  • Cogeneration power plant fleet achieved 85 per cent availability in third quarter 2024, taking into account a planned outage at MacKay River Cogeneration Plant.
Our continued focus on project execution is delivering meaningful results. Southeast Gateway continues to make significant progress, achieving mechanical completion of all major onshore facilities, including the onshore pipeline, both compressor station